Riggs National Bank said yesterday it doesn't want half of the branch offices and most of the loans that it acquired when it bought the failed National Bank of Washington from the Federal Deposit Insurance Corp. three weeks ago.

Eight of the NBW branches -- including the main banking office at 619 14th St. NW -- will be closed next Wednesday, and customers' accounts will be transferred to a nearby Riggs branch, said David R. Palombi, Riggs's director of communications.

He said Riggs also plans to return to the government as much as 90 percent of the $750 million in NBW loans it took on when it purchased the bank for $33 million. That decision means the NBW restructuring will cost more than originally projected, said Cody Buck, the Federal Deposit Insurance Corp. official in charge of cleaning up what is left of NBW. Analysts have estimated the NBW failure cost at more than $500 million.

When Riggs bought its failed rival earlier this month, it took on about $1 billion of NBW's deposits and also acquired $750 million in NBW loans. Under standard terms of FDIC bank restructurings, Riggs got the right to return any of the loans to the FDIC and also the power to close any of the 18 NBW branches in the future.

Riggs's decision to return most of the NBW loans to the FDIC had been widely predicted in local banking circles. Neither of the two other banks that negotiated to buy NBW were willing to take any of its loans. The FDIC rejected the other bidders after Riggs Chairman Joe L. Allbritton said he would at least look at the loans so long as the government promised to take any that Riggs didn't want.

Since Riggs is returning most of the loans to the FDIC, most NBW borrowers will have to deal with FDIC officials rather than Riggs on their loans. Until the loans are sold, the FDIC will become the banker for the NBW borrowers, collecting payments on the loans and handling all other aspects of the transactions.

The eight branches to be closed next week are mostly downtown and are within a short walk of a Riggs branch, Palombi said. It was unclear how many employees would lose their jobs as a result of the closings, which include the Georgetown NBW office at Wisconsin Avenue and M Street NW, which is across the street from Riggs's branch in the former Farmers & Merchants' bank building; the NBW branch on the opposite side of Dupont Circle from a Riggs office; and pair of branches within two blocks of Riggs's main office at 15th Street and Pennsylvania Avenue NW. Other NBW branches to be closed are at 901 15th St. NW; 1129 20th St. NW; 3850 South Capitol St. SE; 401 M St. NW; and 1100 17th St. NW.

The branch locations will be turned over to the FDIC, which can dispose of leases or properties owned as it sees fit. Among the properties the FDIC will own are the stately NBW headquarters office.

Former NBW customers are being notified that their accounts will be transferred to a nearby Riggs location, but they can transact business at any branch, Palombi said. Customers with safe deposit boxes at the NBW branches being closed will be given time to retrieve their property and offered boxes at a nearby Riggs branch.

Palombi said Riggs will keep about $20 million in overdraft lines of credit, assuring that NBW customers who had so-called "bounce free" checking or automatic loan privileges on their checking accounts will continue to receive those services. Riggs is examining another $50 million to $75 million in consumer loans and home mortgages and will decide in the next few weeks whether to keep them. Palombi said that of the $750 million in loans acquired from NBW, between $655 million and $680 million will be returned to the government.

Under its agreement with the FDIC, Riggs does not have to explain why it doesn't want any NBW loans, and Palombi would only hint at what was wrong. Riggs would like to keep many of the NBW loan customers, he said, but would "prefer to make these loans under our policies, our procedures and our documentation."

Industry sources speculated that Riggs was not satisfied with the collateral on many of the loans and would have charged higher interest rates on some if it had made them itself.

At least 60 percent of the NBW loans rejected by Riggs were real estate loans. Banks are reluctant to take on commercial real estate loans these days because of uncertainty about the future of the real estate market. The decision to return most of the NBW loans to the government will dramatically reduce the cost to Riggs of acquiring the rival bank and will ultimately cost the FDIC more money.

Buck said the FDIC liquidation team he heads will now try to sell the loans to other investors. Usually such investors aren't willing to pay 100 cents on the dollar, he said, and any discount from face value the government has to give to sell the loans will add to the FDIC's cost of cleaning up NBW. How much more the cleanup will cost because of Riggs's decision to give back the loans won't be known until all the loans are sold, paid off by the borrowers or otherwise settled, Buck added.