WASHINGTON - Regulators are seeking ways to exempt some banks - particularly small ones - from having to perform complex and costly analyses of interest rate risk.

Officials of the three federal banking agencies said Tuesday that they are developing criteria to screen out banks that have little exposure to rate shifts.

Banks that pass this test would not have to perform the elaborate analysis of interest rate exposure required under a proposal crafted by the Federal Deposit Insurance Corp., the Federal Reserve Board, and the Office of the Comptroller of the Currency.

Capital Cushion

The joint proposal, which has been approved by the Fed and the FDIC and is expected to be published in the Federal Register shortly, would require banks to hold additional capital if they have unusually high exposure to swings in interest rates.

FDIC board members, who voted on the plan at a meeting on Tuesday, praised the proposal, saying it should help regulators and examiners identify which banks are taking more than normal rate risk.

But they said the procedure may be unnecessarily costly and time-consuming for many banks, and asked whether small banks could be exempted.

"There are a ton of small banks where interest rate risk is already pretty minimal," said Federal Deposit Insurance Corp. Chairman William Taylor.

Establishing a Pattern

William A. Stark, an FDIC assistant director who presented the proposal to the board, said small banks could not be exempted outright unless regulators could prove that they uniformly have less interest rate risk than bigger banks.

However, Mr. Stark said, if a screening procedure were developed, "any bank, small or large, that could meet [the criteria] would not have to go through the elaborate calculations."

Though small banks would likely be the main beneficiaries, some regional institutions that traditionally take on little rate risk could also be exempted, industry sources said.

20% Seen Having Excess Risk

Mr. Taylor noted that the calculations are expected to reveal larger than normal interest rate exposure at about one-fifth of U.S. banks.

That means, he added, that four out of five banks will have to spend a lot of time and money analyzing their balance sheets to find that they don't have a problem.

"It's going to be a burden if we add all of this mathematical calculation to an already overburdened industry," FDIC board member Andrew "Skip" Hove said.

At Tuesday's meeting, Stephen L. Steinbrink, the acting comptroller of the currency and a member of the FDIC board, echoed Mr. Taylor's views, and appealed to bankers to comment on ways to develop a workable exemption.

Support at the Fed

In a telephone interview, a senior Fed staff member expressed support for the effort.

"If a bank has a big, healthy capital ratio, does it have to go through all this reporting? That's a concern we all have," the Fed official said. "If we could find a solution, we'd be happy to do it."

Last year's banking law directed regulators to incorporate an interest rate risk component into bank capital rules by June 1993.

The Fed approved the proposal June 24, and the FDIC followed suit on Tuesday. The OCC must obtain clearance from the Treasury Department before it can sign off on the plan.

The rule creates an explicit capital charge for banks that assume interest rate risk exceeding a benchmark level. It is designed to measure the effects of a 100-basis-point shift in rates on the economic value of the bank.

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