We present studies using natural bond orbitals (NBOs) as a starting point for a localized electron correlation treatment, as these kind of localized orbitals lead to CCSD results which show significant transferability and exponential decay patterns in the (T) over cap (2) amplitudes. The NBO CCSD approach combines the advantages of both the HF CCSD formulation (less. amplitudes, orthogonal orbitals) and the AO-based CCSD strategy (fast decay of amplitudes and integrals). (C) 2002 Elsevier Science B.V. All rights reserved.