Capital Briefs: Treasury under secretary Many Misconstrue 'Held to

When the Financial Accounting Standards Board announced last month that companies had until Dec. 31 to move securities out of the "held to maturity" category, some bankers assumed they could make as many such transfers as they wanted.

Not so.

"It is a one-time opportunity," said Robert Wilkins, a standards board project manager. "They need to make all of the transfers as of the same date."

This limitation is not explicitly set out in the accounting board's Nov. 15 question-and-answer guide to implementing statement 115, the 1993 accounting rule that requires securities holdings to be classified as "trading," "available for sale," or "held to maturity."

"A lot of banks may be doing it wrong," said Diane Casey, national director of financial institutions regulatory issues with the accounting firm Grant Thornton.

Unlike securities in the other two categories, those classified as held to maturity do not have to be valued at their fair market price. But selling or moving securities from the held-to-maturity portfolio before they mature can "taint" the rest of the portfolio and force it to be marked to market.

The accounting board decided to let companies reassess their securities holdings in part because, when statement 115 came out in May 1993, it wasn't clear whether bank regulatory agencies would fully adopt the guidelines. In fact, the agencies opted not to mark available-for-sale securities to market when calculating regulatory capital, making the category more attractive to bankers.

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