OCC 2000-29 
Subject: Risk-Based Capital--Simplified Framework for Non- Complex
Institutions Advance Notice of Proposed Rulemaking November 3, 2000
TO:  Chief Executive Officers of National Banks, Department and Division
Heads, Examining Personnel and Other Interested Parties
DATE:  November 3, 2000

PURPOSE

This bulletin transmits an advance notice of proposed rulemaking (ANPR) on
a simplified regulatory capital framework for non- complex banking
institutions published in the Federal Register on November 3, 2000. [Note:
The ANPR is a joint publication of the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision (collectively, the Agencies).] Comments on the ANPR are due
February 1, 2001.

SUMMARY

Currently, banks and thrifts are required to maintain minimum levels of
risk-based capital under a framework established by the 1988 Capital
Accord.  [Note: The Capital Accord was developed by the Basel Committee on
Banking Supervision.  The framework is described in a document entitled
"International Convergence of Capital Measurement" issued in July 1988
(with subsequent amendments).]  However, the Agencies believe that the
size, complexity, and risk profile of many banking institutions may
warrant the application of a simplified capital framework that could
reduce the regulatory burden associated with existing capital standards
(or any future modification of those standards).  Under such a framework,
banks deemed non-complex would be subject to simplified capital
requirements.

The ANPR describes non-complex banks as being relatively small in terms of
asset size and operations, possessing a relatively simple balance sheet,
being principally engaged in traditional banking activities, and not
having significant off-balance-sheet exposures.  It is also notes that
such banks generally have regulatory capital far in excess of the required
minimums.  The ANPR suggests that in order to be eligible for the
non-complex framework a bank should maintain a level of capital
sufficiently high such that more precise risk-based measures are not
necessary.

The ANPR considers the potential for using the nature of a bank's
activities, its asset size, and its risk profile as determinants of
eligibility for the simplified regulatory capital framework.  Three
options for setting minimum regulatory capital requirements for
non-complex banks are presented: a risk-based ratio, a simple leverage
ratio, and a modified leverage ratio that incorporates certain
off-balance-sheet exposures.

The ANPR identifies some advantages and disadvantages associated with
developing a regulatory capital framework for non-complex banks.  The main
objective is to obtain preliminary views from the industry and the public
regarding such a framework.  The information gathered as a result of this
ANPR will assist in determining whether the concept of a simplified
regulatory capital framework is worth pursuing, and, if so, how the
framework should be structured and implemented.

COMMENTS

The OCC encourages all interested parties to review and comment on the
attached ANPR.  Please forward all comments to the Communications
Division, 250 E Street SW, Washington, DC 20219, Attention Docket No.
00-24.

FOR FURTHER INFORMATION CONTACT:

Amrit Sekhon, risk specialist, Capital Policy Division, at (202) 874-5211,
or Ron Shimabukuro, senior attorney, Legislative and Regulatory Activities
Division, at (202) 874-5090.



________________________
Jonathan L. Fiechter
Senior Deputy Comptroller
International and Economic Affairs


Attachment--65 FR 66193