The Bisys Group Inc., Little Fails, N.J., believes it has found a way for banks to quickly gather the assets they need to make their proprietary variable annuities profitable.

The Internal Revenue Service has ruled that banks can use employee-benefit assets to seed the annuities, according to William J. Tomko, a vice president of the company's Ohio-based Bisys Investment Services Group unit, formerly known as the Winsbury Group.

That is a significant change for banks, which until now have had to build proprietary annuities from scratch. Under the change, they will be able to create proprietary annuities in much the same way that they have created mutual funds: by convening assets held in commingled trust funds.

Bisys, a leading distributor of bank-managed mutual funds, obtained the go-ahead for such conversions in a private letter ruling from the IRS. Bisys submitted a request for the ruling on behalf of a client bank, which it declined to name. Technically, the riding enables banks that reorganize employee-benefit funds as mutual funds to add new investments in the form of variable annuities.

The employee-benefit and variable-annuity assets could be mixed in a "hub" portfolio without stripping the variable annuities of their tax-deferred status, according to a letter sent to Mr. Tomko last March by Martin E. Lybecker, a law partner with Ropes & Gray, Washington. A revenue ruling implementing the change was released by the agency Oct. 3, making it possible for Shawmut to Create Its Own Variable Annuities

Shawmut Nati0nai Corp. has decided to create its own variable annuities, after almost scrapping the idea because of costs.

The Boston banking company was put off by the hundreds of thousands of dollars it takes to organize and register annuities, and the millions of dollars of assets the products need to produce profits, said Michael J. Rothmeier, an executive vice president.

"It's difficult in any environment to create enough assets to make it economically viable," said Mr. Rothmeier, who heads the company's investments arm.

Shawmut now has come up with a strategy and a structure it believes will allow the annuities to produce income, Mr. Rothmeier said.

The annuities will be out next year with investment options that are linked to several of the banking company's own funds, and may also contain several investment options from an outside fund company, he said.

Mr. Rothmeier also said it was too soon to disclose the name of the insurance company that Shawmut will work with to create the annuities.

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