Stock conversion eased by OTS.

WASHINGTON -- Troubled mutual savings and loans will be able to convert to stock institutions more quickly under a final rule released Monday by the Office of Thrift Supervision.

The rule allows mutuals to raise capital by selling stock to a limited number of investors under a so-called government-supervisory conversion. It also does not require a thrift to first offer stock to depositors and the general public.

The rule, which was published Monday in the Federal Register and goes into effect in December, also expands the definition of troubled.

For example, S&Ls that are "significantly undercapitalized," or have less than 6% risk-based capital and less than 3% core capital, will generally qualify for a voluntary conversion.

And institutions that are categorized as "undercapitalized," with less than 8% risk-based capital and less than 4% core capital, may qualify on a case-by-case basis.

Current rules let institutions convert only if liabilities exceed assets, or if a waiver is granted by the OTS director.

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