Magazine article American Banker

OTS Unveils Rules on Public Sale of Minority Stakes in Thrifts

Magazine article American Banker

OTS Unveils Rules on Public Sale of Minority Stakes in Thrifts

Article excerpt

Washington - The Office of Thrift Supervision on Wednesday released regulations that tell some depositor-owned savings associations how to structure sales of minority stakes to the public.

The regulations, which take effect Sept. 20, are aimed at mutual holding companies, a recently created corporate structure for thrifts that combines the attributes of mutual ownership with those of stock-owned companies.

Mutual holding companies allow federally chartered mutual thrifts to sell minority shares of stock to the public. At the same time, the thrift creates a holding company for itself that holds a majority of the thrift's stock and remains a mutual - or depositor-owned - institution.

Stracture Offers Flexibility

Wendy B. Samuel, regulatory counsel at Savings and Community Bankers of America, said thrifts that have used the mutual holding company structure "have been very pleased with the flexibility - they have gotten the result that they wanted."

The OTS views mutual thrifts converting to stock-owned institutions - whether using the new MHC structure or through a standard stock conversion - as one way for the thrift industry to raise capital.

Consumer groups praised the new OTS rules for safeguarding depositors' interests by stipulating that they have the right to buy stock before management, and by requiring independent appraisals of the company's value.

"It is injecting some fairness where there was a great potential for rip-offs," said Chris Lewis, director of banking and housing policy at the Consumer Federation of America. …

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