UPDATE 1-US regulators urge banks to work with oil spill victims

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WASHINGTON, July 14 (Reuters) - U.S. financial regulators on Wednesday urged banks to work with businesses in states that have been hit by the disastrous BP oil spill in the Gulf of Mexico by temporarily waiving late fees and other charges.

Lenders might also consider easing credit terms to certain borrowers, according to a joint statement from the Federal Reserve, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Bank Supervisors.

Nearly three months into the worst oil spill in U.S. history, BP Plc (BP.L) (BP.N) has yet to successfully shut off the thousands of gallons of crude spilling into the gulf daily. The environmental effects are expected to have a deep impact in surrounding areas for years to come.

"Financial institutions are encouraged to work with their customers and consider measures to assist creditworthy borrowers affected by the Gulf oil spill," the agencies said in a statement.

They could do so, the regulators said, by temporarily waiving late payment charges, ATM fees and penalties for early withdrawal of savings, as well as expediting lending decisions.

"Consistent with the regulators' longstanding practice of assessing the financial condition of institutions directly affected by natural and other disasters, examiners will consider the unusual circumstances of banks and credit unions in affected areas," they said.