Few banks heavily exposed to GSE preferred shares: OCC

WASHINGTON (Reuters) - A few national banks have "significant" exposure to Fannie Mae and Freddie Mac preferred stock with respect to their capital, the Office of the Comptroller of the Currency said on Monday.

"Only a very few national banks have holdings that are significant compared to their capital," OCC spokesman Kevin Mukri said, adding that the regulatory agency is monitoring exposure at national banks.

"They are small national banks with exposure to Fannie and Freddie preferred stock," Mukri said "These holdings are primarily in the form of preferred stock."

The Office of Thrift Supervision gave a similar estimate on Sunday. The regulator said less than 1 percent of its thrifts have "significant" concentrations of GSE stock.

At the end of the second quarter, the OTS supervised 829 thrifts with assets of $1.51 trillion.

OTS spokesman William Ruberry said the concentrations involve smaller thrifts.

U.S. banking regulators said a limited number of banks and thrifts hold "significant" exposure to equities securities of the government-sponsored entities, which were taken over by the U.S. government on Sunday.

The agencies, as well as the Federal Reserve, said they are working with banks and thrifts to develop ways to restore their capital levels which will suffer due to the plummeting value of Fannie and Freddie stocks.

Bank regulators, however, did not say how many banks, hold Fannie and Freddie common and preferred stock without what they consider "significant" exposure.

An industry expert said the number of banks which do not have significant exposure could still be hurt over the next few months because they will be forced to write down their Fannie and Freddie equity holdings.

Wells Fargo & Co, the fifth-largest U.S. bank, said late on Monday it expects to take a third-quarter charge related to $480 million of preferred stock investments in Fannie Mae and Freddie Mac.

The takeover came as worries heightened over shrinking capital at the congressionally chartered companies, which had combined losses of nearly $14 billion the last four quarters.

The final price tag for U.S. taxpayers has not be estimated yet until the extent of the declines in the mortgage market were fully known.

According to Keefe, Bruyette & Woods's equity research, Gateway Financial Holdings Inc and Sovereign Bancorp are a few of the regional banks with the most exposure to the mortgage giants' preferred stock relative to tangible capital.

Under the Treasury Department plan, stockholders will not fair well in the claims process. Common stockholders would be placed last in line with preferred holders ahead of them. Bond holders are likely to be long-term beneficiaries.

Federal Reserve Bank of Dallas President Richard Fisher said on Monday that Fed examiners discovered that capital at Fannie and Freddie was inadequate.

The Treasury had hired Morgan Stanley on August 5 to advise as to whether Fannie and Freddie were adequately capitalized.

The OCC said on Monday that some of its staff also provided the Treasury and the GSEs' regulator some help in examining the companies' risk management, financial and legal practices.

"We had several very small teams of examiners who provided technical assistance on supervisory issues and a small team of lawyers who provided technical legal advise," said the OCC's Mukri, while declining to disclosure the findings from the examinations.

(Additional reporting by Alister Bull in Austin, Texas and Jonathan Stempel in New York; editing by Gary Crosse)