Capital Briefs: OTS May Ease Rule On Dividend Payment

Healthy thrifts that do not belong to holding companies would no longer have to notify the Office of Thrift Supervision before paying cash dividends under a proposal issued by the agency on Wednesday.

The plan also would cover other capital distributions, including loans to affiliates to finance stock or debt redemptions, as well as corporate restructuring payments.

Of the 1,272 thrifts, 620 are not owned by holding companies. The rule applies solely to independent institutions because only Congress can change the notification requirement for thrifts owned by holding companies, the OTS said.

Currently, these thrifts must notify the OTS before making any capital distributions. When the agency adopted this rule in 1990, the industry was generally undercapitalized.

In December 1994, the OTS proposed revising the rule to reflect new prompt corrective action regulations, which prohibit capital distributions that would make an institution undercapitalized.

But because of the recent health of the industry-98% of federal thrifts were "well capitalized" as of June 30-the OTS decided to rewrite its proposal. Wednesday's plan replaces the December 1994 proposal.

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