[Federal Register Volume 59, Number 35 (Tuesday, February 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-3605]


[[Page Unknown]]

[Federal Register: February 22, 1994]


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OFFICE OF PERSONNEL MANAGEMENT
DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

12 CFR Part 3

[Docket No. 94-01]

FEDERAL RESERVE SYSTEM

12 CFR Part 208

[Docket No. R-0764]

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 325

RIN 3064-AB15

DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Part 567

[Docket No. 93-90]
RIN 1550-AA59

 

Risk-Based Capital Standards; Concentration of Credit Risk and 
Risks of Nontraditional Activities

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury; 
Board of Governors of the Federal Reserve System (Board); Federal 
Deposit Insurance Corporation (FDIC); and Office of Thrift Supervision 
(OTS), Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The OCC, the Board, the FDIC and the OTS (collectively ``the 
agencies'') are issuing this proposed rule to implement the portions of 
section 305 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (FDICIA) that require the agencies to revise their risk-
based capital standards for insured depository institutions to ensure 
that those standards take adequate account of concentration of credit 
risk and the risks of nontraditional activities. The intended effect of 
this proposed rule is to ensure that the agencies take adequate account 
of concentration of credit risk and the risks of nontraditional 
activities in assessing an institution's capital adequacy. The proposed 
rule amends the risk-based capital standards by explicitly identifying 
concentration of credit risk and certain risks arising from 
nontraditional activities, as well as an institution's ability to 
manage these risks, as important factors in assessing an institution's 
overall capital adequacy.

DATES: Written comments must be received on or before March 24, 1994.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments will be shared among the 
agencies.
    OCC: Written comments should be submitted to Docket No. 94-01, 
Communications Division, Ninth Floor, Office of the Comptroller of the 
Currency, 250 E Street, SW., Washington, DC 20219. Attention: Karen 
Carter. Comments will be available for inspection and photocopying at 
that address.
    Board: Comments, which should refer to Docket No. R-0764, may be 
mailed to Mr. William Wiles, Secretary, Board of Governors of the 
Federal Reserve System, 20th and Constitution Avenue, NW., Washington, 
DC 20551. Comments addressed to Mr. Wiles may also be delivered to the 
Board's mail room between 8:45 a.m. and 5:15 p.m. and to the security 
control room outside of those hours. Both the mail room and control 
room are accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, NW. Comments may be inspected in room 
B-1122 between 9 a.m. and 5 p.m., except as provided in Sec. 261.8 of 
the Board's Rules Regarding Availability of Information, 12 CFR 261.8.
    FDIC: Robert E. Feldman, Acting Executive Secretary, Attention: 
room F-402, Federal Deposit Insurance Corporation, 550 17th Street, 
NW., Washington, DC 20429. Comments may be hand-delivered to room F-
400, 1776 F Street NW., Washington, DC, on business days between 8:30 
a.m. and 5 p.m. (FAX number (202) 898-3838). Comments will be available 
for inspection and photocopying in room 7118, 550 17th Street, NW., 
Washington, DC 20429, between 9 a.m. and 4:30 p.m. on business days.
    OTS: Written comments should be submitted to Director, Information 
Services Division, Public Affairs, Office of Thrift Supervision, 1700 G 
Street, NW., Washington, DC 20552, Attention Docket No. 93-90. These 
submissions may be hand delivered at 1700 G Street, NW., from 9 a.m. to 
5 p.m. on business days; they may be sent by facsimile transmission to 
FAX Number (202) 906-7755. Submissions must be received by 5 p.m. on 
the day they are due in order to be considered by the OTS. Late filed, 
misaddressed or misidentified submissions will not be considered in 
this notice of proposed rulemaking. Comments will be available for 
public inspection at 1700 G Street, NW., from 1 p.m. until 4 p.m. on 
business days. Visitors will be escorted to and from the Public Reading 
Room at established intervals.

FOR FURTHER INFORMATION CONTACT:

    OCC: For issues relating to concentration of credit risk and the 
risks of nontraditional activities, Roger Tufts, Senior Economic 
Advisor (202/874-5070), Office of the Chief National Bank Examiner. For 
legal issues, Ronald Shimabukuro, Senior Attorney, Bank Operations and 
Assets Division (202/874-4460), Office of the Comptroller of the 
Currency, 250 E Street, SW., Washington, DC 20219.
    Board: For issues related to concentration of credit risk, David 
Wright, Supervisory Financial Analyst, (202/728-5854) and for issues 
related to the risks of nontraditional activities, William Treacy, 
Supervisory Financial Analyst, (202/452-3859), Division of Banking 
Supervision and Regulation; Scott G. Alvarez, Associate General Counsel 
(202/452-3583), Gregory A. Baer, Senior Attorney (202/452-3236), Legal 
Division, Board of Governors of the Federal Reserve System. For the 
hearing impaired only, Telecommunication Device for the Deaf (TDD), 
Dorothea Thompson (202/452-3544), Board of Governors of the Federal 
Reserve System, 20th and C Streets, NW., Washington, DC 20551.
    FDIC: Daniel M. Gautsch, Examination Specialist (202/898-6912), 
Stephen G. Pfeifer, Examination Specialist (202/898-8904), Division of 
Supervision, or Fred S. Carns, Chief, Financial Markets Section, 
Division of Research and Statistics (202/898-3930). For legal issues, 
Pamela E. F. LeCren, Senior Counsel (202/898-3730) or Claude A. Rollin, 
Senior Counsel (202/898-3985), Legal Division, Federal Deposit 
Insurance Corporation, 550 17th Street, NW., Washington, DC 20429.
    OTS: John F. Connolly, Senior Program Manager, Capital Policy (202) 
906-6465; Robert Fishman, Senior Program Manager, Supervision Policy 
(202) 906-5672; Dorene Rosenthal, Senior Attorney, Regulations, 
Legislation and Opinions Division (202) 906-7268, Office of Thrift 
Supervision, 1700 G Street, NW., Washington, DC 20552.

SUPPLEMENTARY INFORMATION:

A. Background

    The risk-based capital standards tailor an institution's minimum 
capital requirement to broad categories of credit risk embodied in its 
assets and off-balance-sheet instruments. These standards require 
institutions to have total capital equal to at least 8 percent of their 
risk-weighted assets.1 Institutions with high or inordinate levels 
of risk are expected to operate above minimum capital standards.
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    \1\As defined, risk-weighted assets include credit exposures 
contained in off-balance-sheet instruments.
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    Section 305(b) of FDICIA, (12 U.S.C. 1828 note) requires the 
agencies to revise their risk-based capital standards for insured 
depository institutions to ensure that those standards take adequate 
account of interest rate risk, concentration of credit risk and the 
risks of nontraditional activities. This proposed rule addresses 
concentration of credit risk and the risks of nontraditional 
activities. Rulemakings regarding interest rate risk are being issued 
separately.
    Advance notices of proposed rulemaking issued by the agencies with 
respect to section 305 requested comment through a series of questions 
on possible approaches to defining, measuring and incorporating these 
risks in the risk-based capital standards. Comments received in 
response to the notices are summarized in the following discussions of 
each risk.
    Currently, each agency addresses capital adequacy through a variety 
of supervisory actions and considers the risks of credit concentrations 
and nontraditional activities in taking those varied supervisory 
actions.

B. Concentration of Credit Risk

Summary of Comments

    The agencies received 107 responses to the advance notice of 
proposed rulemaking on concentration of credit risk, with some 
duplication among agencies. In response to the question of what factors 
should be used in defining concentrations, most commenters agreed that 
borrower, industry, geography, collateral and loan type are relevant 
factors to define concentration risk. There was less consensus on which 
of these factors is the most significant or how to apply these factors 
in determining concentrations. Some commenters suggested using a narrow 
definition for concentrations to make any rule the agencies might adopt 
easier to implement and less burdensome to the industry. Others 
suggested caution in defining concentrations given data limitations and 
differences in the way definitions are applied by institutions in 
managing risk.
    Few commenters offered specific guidance as to an appropriate 
objective formula to assess capital for concentration risk. However, 
many commenters indicated that determinations should be performed on a 
case-by-case basis because of the high variability in type and 
riskiness of concentrations among institutions. Regarding the general 
levels of capital appropriate for concentrations, some commenters 
suggested requiring higher than minimum capital ratios for affected 
institutions, while others suggested reducing reported capital to 
reflect the additional risk. Other commenters indicated that 
concentration risk should be viewed in the context of all other factors 
affecting the capital adequacy of the institution, including the size 
of the allowance for loan losses, profitability, liquidity, and 
internal controls.
    Some commenters were concerned that proposed regulations might be 
overly burdensome or provide incentives for institutions to engage in 
activities such as out-of-territory lending that, while adding to 
diversity, also add to an institution's overall risk. Some commenters 
were also concerned that new regulations might place the banking 
industry at a competitive disadvantage.

Proposed Approach

    Most institutions, large and small, can identify and track large 
concentrations of credit risk by individual or related groups of 
borrowers. Many institutions are also able to identify concentrations 
by either industry, geography, country, loan type or other relevant 
factors. However, because of practical and theoretical problems, there 
is no generally accepted approach to identify and quantify the 
magnitude of risk associated with concentrations of credit. In 
particular, definitions and analyses of concentrations are not uniform 
within the industry and are based in part on the subjective judgments 
of each institution using its experience and knowledge of its specific 
borrowers, market area and products. For these reasons, it is not 
feasible at this time to quantify the risk related to concentrations of 
credit for use in a formula-based capital calculation. However, 
techniques do exist to identify broad classes of concentrations and to 
recognize significant exposures.
    The volatile and unpredictable nature of the timing and magnitude 
of losses associated with concentrations suggests that the effective 
tracking and management of such risk is important to ensuring the 
safety and soundness of financial institutions. Moreover, the agencies 
believe that institutions with significant levels of concentrations of 
credit risk should hold capital above the regulatory minimums.
    With these considerations in mind, the agencies propose to take 
account of concentration of credit risk in their risk-based capital 
guidelines or regulations by amending the standards to explicitly 
identify concentrations of credit risk and an institution's ability to 
manage them as important factors in assessing an institution's overall 
capital adequacy.
    In addition to reviewing concentrations of credit risk pursuant to 
section 305, the agencies also may review an institution's management 
of concentrations of credit risk for adequacy and consistency with 
safety and soundness standards regarding internal controls, credit 
underwriting or other relevant operational and managerial areas to be 
promulgated pursuant to section 132 of FDICIA (12 U.S.C. 1831p-1).
    In implementing regulations concerning concentration of credit 
risk, the agencies recognize the need to ensure that any treatment does 
not inadvertently create false incentives or unintended consequences 
that might decrease the safety and soundness of the banking and thrift 
industries or unnecessarily reduce the availability of credit to 
potential borrowers. For example, while portfolio diversification is a 
desirable goal, it may also increase an institution's overall risk if 
accomplished by lending in unfamiliar market areas to out-of-territory 
borrowers or by rapid expansion of new loan products for which the 
institution does not have adequate expertise. In addition, to the 
extent certain loan products, geographic areas or borrowers are 
perceived to fit into generic designations of concentrations, credit 
availability to certain groups of borrowers might be severely limited, 
despite the creditworthiness of individual borrowers, or the neutral or 
beneficial impact a single credit might have on the overall risk of the 
institution's portfolio.
    Another consideration in evaluating credit concentrations is the 
``Qualified Thrift Lender'' test that requires thrifts by statute to 
hold 65 percent of their assets in qualifying categories. This 
requirement necessarily ``concentrates'' a thrift's portfolio in 
certain types of assets. OTS does not intend to implement section 305 
in such a way as to penalize thrift institutions for fulfilling this 
obligation.

C. Risks of Nontraditional Activities

Summary of Comments

    The agencies received 69 comment letters on nontraditional 
activities, with some duplication among the agencies. Many commenters 
believed that it would be very difficult to create a definitive list of 
activities that should be considered nontraditional. Some commenters 
indicated that the risks of nontraditional activities depend on both 
the activity and the institution involved, and thus that each 
depository institution should be addressed on a case-by-case basis 
through the examination process. It was also observed that, while the 
activities themselves might be new or nontraditional, the risks of 
these activities can be segmented into components (e.g., credit risk, 
interest-rate risk, operating risk) that are normally associated with 
traditional banking activities.
    Commenters also raised concerns that explicit capital requirements 
for nontraditional activities might affect the competitive balance 
between insured depository institutions and non-bank financial firms 
such as securities firms. In particular, concern was raised that 
restricting new activities could limit the ability of banks and thrifts 
to compete with non-bank competitors, or alternatively restrictions 
might unduly discourage depository institutions from undertaking 
otherwise prudent initiatives. Some commenters also indicated that 
capital standards imposed for an activity should be parallel to 
standards imposed on non-banks that compete in the same activity.
    Some commenters expressed concern about the potential risks that 
arise from inexperience when a smaller or less- sophisticated 
institution first embarks on a new business venture, while others 
believed that the activities undertaken by the larger and more 
experienced institutions present greater risks.

Proposed Approach

    New developments in technology and financial markets have 
introduced significant changes to the banking industry, and in some 
cases have led institutions to engage in activities not traditionally 
considered part of their business. Both in the risk-based capital 
regulations and guidelines adopted by the agencies in 1989, and in 
subsequent revisions and interpretations, the agencies have adopted 
measures to take adequate account of the risks of nontraditional 
activities under the risk-based capital standards. Thus, to the extent 
that section 305 constitutes a mandate to the agencies to make certain 
that risk-based capital standards are kept current with industry 
practices, the agencies have been acting consistently with section 305. 
Furthermore, in keeping with section 305, the agencies will continue 
their efforts to incorporate nontraditional activities into risk-based 
capital.
    The agencies propose to take account of the risks posed by 
nontraditional activities by ensuring that, as members of the industry 
begin to engage in, or significantly expand their participation in, a 
nontraditional activity, the risks of that activity are promptly 
analyzed and the activity is given appropriate capital treatment. 
Moreover, the agencies recognize that an institution's ability to 
adequately manage the risks posed by nontraditional activities affects 
its risk exposure. Therefore, the agencies also propose to amend their 
risk-based capital standards to explicitly identify the management of 
nontraditional activities as an important factor to consider in 
assessing an institution's overall capital adequacy.

D. Biennial Review of Risk-Based Capital Standards

    Section 305(a) of FDICIA requires the agencies to review their 
capital standards biennially to determine whether those standards are 
sufficient to facilitate prompt corrective action under section 38 of 
FDICIA, 12 U.S.C. 1831o. As part of any such review, the agencies 
expect that they will consider the asset coverage of the risk-based 
capital standards, including in particular the coverage of 
concentrations of credit and nontraditional activities. The agencies, 
though, do not intend to wait until the next biennial review should a 
nontraditional activity evolve rapidly in the industry; rather, such 
products will be promptly reviewed for proper treatment under risk-
based capital. Similarly, as new developments in identifying and 
measuring concentration of credit risk emerge, potential refinements to 
risk-based capital standards will be considered.
    In addition, to the extent appropriate, the agencies will issue 
examination guidelines on new developments in nontraditional activities 
or concentrations of credit to ensure that adequate account is taken of 
the risks of these activities.

E. Paperwork Reduction Act

    No collections of information pursuant to section 3504(h) of the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.) are contained in this 
notice. Consequently, no information has been submitted to the Office 
of Management and Budget for review.

F. Regulatory Flexibility Act Statement

    Each agency has concluded after reviewing the proposed regulation 
that the regulation, if adopted, will not impose a significant economic 
hardship on small institutions. The proposal does not necessitate the 
development of sophisticated recordkeeping or reporting systems by 
small institutions nor will small institutions need to seek out the 
expertise of specialized accountants, lawyers, or managers in order to 
comply with the regulation. Each agency therefore hereby certifies 
pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 
605(b)) that the proposal, if adopted, will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

G. Executive Order 12866

    The OCC and the OTS have determined that this proposed rule does 
not constitute a ``significant regulatory action.'' This proposed rule 
will amend the risk-based capital guidelines to clarify that the 
agencies may impose additional capital requirements above the minimum 
capital leverage and risk-based capital requirements where an 
institution has significant concentration of credit risk or risks from 
nontraditional activities. This proposed rule is consistent with the 
current practice and policies of the agencies and is required by 
section 305 of FDICIA.

H. Proposed Regulation

    In consideration of the foregoing, the OCC, the Board, the FDIC and 
the OTS hereby propose to amend title 12 of the Code of Federal 
Regulations by amending their respective parts as follows:

OFFICE OF THE COMPTROLLER OF THE CURRENCY

12 CFR CHAPTER I

List of Subjects in 12 CFR Part 3

    Administrative practice and procedure, Capital risk, National 
banks, Reporting and recordkeeping requirements.

Authority and Issuance

    For the reasons set out in the preamble, part 3 of title 12, 
chapter I, of the Code of Federal Regulations is proposed to be amended 
as set forth below.

PART 3--MINIMUM CAPITAL RATIOS; ISSUANCE OF DIRECTIVES

    1. The authority citation for part 3 continues to read as follows:

    Authority: 12 U.S.C. 93a, 161, 1818, 1828(n), 1828 note, 1831n 
note, 3907 and 3909.

    2. In part 3, Sec. 3.10 is revised to read as follows:


Sec. 3.10  Applicability.

    The OCC may require higher minimum capital ratios for an individual 
bank in view of its circumstances. For example, higher capital ratios 
may be appropriate for:
    (a) A newly chartered bank;
    (b) A bank receiving special supervisory attention;
    (c) A bank that has, or is expected to have, losses resulting in 
capital inadequacy;
    (d) A bank with significant exposure due to interest rate risk, the 
risks from concentrations of credit, certain risks arising from 
nontraditional activities, or management's overall inability to monitor 
and control financial and operating risks presented by concentrations 
of credit and nontraditional activities;
    (e) A bank with significant exposure due to fiduciary or 
operational risk;
    (f) A bank exposed to a high degree of asset depreciation, or a low 
level of liquid assets in relation to short-term liabilities;
    (g) A bank exposed to a high volume of, or particularly severe, 
problem loans;
    (h) A bank that is growing rapidly, either internally or through 
acquisitions; or
    (i) A bank that may be adversely affected by the activities or 
condition of its holding company, affiliate(s), or other persons or 
institutions including chain banking organizations, with which it has 
significant business relationships.

FEDERAL RESERVE SYSTEM

12 CFR CHAPTER II

List of Subjects in 12 CFR Part 208

    Accounting, Agriculture, Banks, banking, Confidential business 
information, Currency, Reporting and record keeping requirements, 
Securities.

    For the reasons set forth in the preamble, the Board is proposing 
to amend 12 CFR part 208 as follows:

PART 208--MEMBERSHIP OF STATE BANKING INSTITUTIONS IN THE FEDERAL 
RESERVE SYSTEM (REGULATION H)

    1. The authority citation for part 208 continues to read as 
follows:

    Authority: 12 U.S.C. 36, 248(a), 248(c), 321-338, 461, 481-486, 
601, and 611, 1814 and 1823(j); 3105; 3310 and 3331-3351, 3906-3909; 
15 U.S.C. 78b, 78l(b), 78l(g), 78l(i), 78o-4(c) (5), 78q, 78q-1, and 
78w.

    2. Appendix A to part 208 is amended by revising the fifth and 
sixth paragraphs under ``I. Overview'' to read as follows:

Appendix A to Part 208--Capital Adequacy Guidelines for State Member 
Banks: Risk-Based Measure

I. Overview

* * * * *
    The risk-based capital ratio focuses principally on broad 
categories of credit risk, although the framework for assigning 
assets and off-balance-sheet items to risk categories does 
incorporate elements of transfer risk, as well as limited instances 
of interest rate and market risk. The framework incorporates risks 
arising from traditional banking activities as well as risks arising 
from nontraditional activities. The risk-based ratio does not, 
however, incorporate other factors that can affect an institution's 
financial condition. These factors include overall interest-rate 
exposure; liquidity, funding and market risks; the quality and level 
of earnings; investment, loan portfolio, and other concentrations of 
credit risk; certain risks arising from nontraditional activities; 
the quality of loans and investments; the effectiveness of loan and 
investment policies; and management's overall ability to monitor and 
control financial and operating risks, including the risks presented 
by concentrations of credit and nontraditional activities.
    In addition to evaluating capital ratios, an overall assessment 
of capital adequacy must take account of those factors, including, 
in particular, the level and severity of problem and classified 
assets. For this reason, the final supervisory judgement on a bank's 
capital adequacy may differ significantly from conclusions that 
might be drawn solely from the level of its risk-based capital 
ratio.
* * * * *

FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR CHAPTER III

List of Subjects in 12 CFR Part 325

    Bank deposit insurance, Banks, Banking, Capital adequacy, Reporting 
and recordkeeping requirements, Savings associations, State nonmember 
banks.

    For the reasons set forth in the preamble, the Board of Directors 
of the Federal Deposit Insurance Corporation hereby proposes to amend 
part 325 of title 12 of the Code of Federal Regulations as follows:

PART 325--CAPITAL MAINTENANCE

    1. The authority citation for part 325 is revised to read as 
follows:

    Authority: 12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 
1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 
1828(o), 1831o, 3907, 3909; Pub. L. 102-233, 105 Stat. 1761, 1790 
(12 U.S.C. 1831n note); Pub. L. 102-242, 105 Stat. 2236, 2386 (12 
U.S.C. 1828 note).


Sec. 325.3  [Amended]

    2. Section 325.3(a) is amended in the fourth sentence by adding 
``significant risks from concentrations of credit or nontraditional 
activities,'' immediately after ``funding risks,'' and by adding ``will 
take these other factors into account in analyzing the bank's capital 
adequacy and'' immediately after the third time ``FDIC'' appears in the 
section.
    3. The fifth paragraph of the undesignated text of appendix A to 
part 325 is revised to read as follows:

Appendix A to Part 325--Statement of Policy on Risk-Based Capital

* * * * *
    The risk-based capital ratio focuses principally on broad 
categories of credit risk; however, the ratio does not take account 
of many other factors that can affect a bank's financial condition. 
These factors include overall interest rate risk exposure; 
liquidity, funding and market risks; the quality and level of 
earnings; investment, loan portfolio, and other concentrations of 
credit risk; certain risks arising from nontraditional activities; 
the quality of loans and investments; the effectiveness of loan and 
investment policies; and management's overall ability to monitor and 
control financial and operating risks, including the risk presented 
by concentrations of credit and nontraditional activities. In 
addition to evaluating capital ratios, an overall assessment of 
capital adequacy must take account of each of these other factors, 
including, in particular, the level and severity of problem and 
adversely classified assets. For this reason, the final supervisory 
judgement on a bank's capital adequacy may differ significantly from 
the conclusions that might be drawn solely from the absolute level 
of the bank's risk-based capital ratio.
* * * * *

OFFICE OF THRIFT SUPERVISION

12 CFR CHAPTER V

List of Subjects in 12 CFR Part 567

    Capital, Reporting and recordkeeping requirements, Savings 
associations.

    Accordingly, the Office of Thrift Supervision hereby proposes to 
amend part 567, chapter V, title 12, Code of Federal Regulation as set 
forth below:
SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 567--CAPITAL

    1. The authority citation for part 567 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828 
(note).

    2. Section 567.3 is amended by revising paragraphs (b)(3) and (9) 
to read as follows:


Sec. 567.3  Individual minimum capital requirements.

* * * * *
    (b) Appropriate considerations for establishing individual minimum 
capital requirements. * * *
* * * * *
    (3) A savings association that has a high degree of exposure to 
interest rate risk, prepayment risk, credit risk, concentration of 
credit risk, certain risks arising from nontraditional activities, or 
similar risks; or a high proportion of off-balance sheet risk, 
especially standby letters of credit;
* * * * *
    (9) A savings association that has a record of operational losses 
that exceeds the average of other, similarly situated savings 
associations; has management deficiencies, including failure to 
adequately monitor and control financial and operating risks, 
especially the risks presented by concentrations of credit and 
nontraditional activities; or has a poor record of supervisory 
compliance.
* * * * *
    Dated: September 14, 1993.
Eugene A. Ludwig,
Comptroller of the Currency.
    Dated: June 14, 1993.
William W. Wiles,
Secretary of the Board of Governors of the Federal Reserve System.
    By order of the Board of Directors.

    Dated at Washington, DC, this 11th day of May, 1993.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Acting Executive Secretary.
    By the Office of Thrift Supervision.

    Dated: June 7, 1993.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 94-3605 Filed 2-18-94; 8:45 am]
BILLING CODES 4810-33-P; 6210-01-P; 0714-01-P; 6720-01-P