On June 30, 2026, the Federal Deposit Insurance Corporation (the “FDIC”) published in the Federal Register a notice of proposed rulemaking (the “NPR”) that would significantly revise the FDIC’s regime for disclosure of confidential supervisory information (“CSI”).[1] Among other things, the NPR would authorize the disclosure of CSI to potential merger counterparties and their employees, auditors and legal counsel (but not investment bankers).[2]
The inability to access CSI of the counterparty in bank M&A transactions has represented a restraint on due diligence, limited integration planning and delayed remedial actions. Accordingly, this proposed amendment should be of meaningful benefit to both parties in a consolidation transaction.
The proposed authorization is subject to several restrictions:
- The authorization is limited to three potential counterparties over a five-year period. This limitation does not apply, however, where there is a written agreement to enter into a merger or other transaction.
- The information must not be used as a substitute for a counterparty’s due diligence.
- Disclosures must be limited to directors, officers, employees and legal counsel with a need to know the confidential information for the purposes of performing their own reasonable due diligence or other duties related to the transaction.
- The FDIC must receive a written waiver from the potential counterparty of potential claims the potential counterparty may have against the FDIC arising from the confidential information.
- Prior to or concurrently with any such disclosure, the insured depository institution must enter into a confidentiality agreement with the intended recipient of the information.
Although the NPR only applies to state non-member banks, it may encourage the Comptroller of the Currency and the Federal Reserve to adopt a similar position for those banks for which they are the primary federal regulators (as well as bank holding companies).