[Federal Register Volume 60, Number 3 (Thursday, January 5, 1995)]
[Notices]
[Pages 1779-1781]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-269]



=======================================================================
-----------------------------------------------------------------------

FEDERAL RESERVE SYSTEM


Agency Forms Under Review

Agency: Board of Governors of the Federal Reserve System.

Action: Notice and a request for public comments.

-----------------------------------------------------------------------

BACKGROUND: On June 15, 1984, the Office of Management and Budget (OMB) 
delegated to the Board of Governors of the Federal Reserve System 
(Board) its approval authority under the Paperwork Reduction Act of 
1980, as per 5 CFR 1320.9, to approve of and assign OMB control numbers 
to collection of information requests and requirements conducted or 
sponsored by the Board under conditions set forth in 5 CFR 1320.9. 
Board-approved collections of information will be incorporated into the 
official OMB inventory of currently approved collections of 
information. A copy of the OMB 83-I and supporting statement and the 
approved collection of information instrument(s) will be placed into 
OMB's public docket files. The following items have received initial 
Board approval for publication and comment. Following review of public 
comments, the proposed information collections will be considered by 
the Board in light of comments and recommendations received. The Board 
will then take final action on the proposal under OMB delegated 
authority. The specific proposed changes to the reports are summarized 
below.

DATES: Comments must be submitted on or before February 6, 1995.

ADDRESSES: Comments, which should refer to the OMB Docket number, 
should be addressed to Mr. William W. Wiles, Secretary, Board of 
Governors of the Federal Reserve System, 20th and C Streets, N.W., 
Washington, D.C. 20551, or delivered to the Board's mail room between 
8:45 a.m. and 5:15 p.m., and to the security control room outside of 
those hours. Both the mail room and the security control room are 
accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, N.W. Comments received may be 
inspected in room B-1122 between 9:00 a.m. and 5:00 p.m., except as 
provided in section 261.8 of the Board's Rules Regarding Availability 
of Information, 12 CFR 261.8(a).
    A copy of the comments may also be submitted to the OMB desk 
officer for the Board: Milo Sunderhauf, Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 3208, Washington, DC 20503.

FOR FURTHER INFORMATION CONTACT: A copy of the proposed form, the 
request for clearance (OMB No. 83-I), supporting statement, 
instructions, and other documents that will be placed into OMB's public 
docket files once approved may be requested from Mary M. McLaughlin, 
Federal Reserve Board Clearance Officer (202-452-3829), Division of 
Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, DC 20551. For the hearing impaired only, contact 
Telecommunications Device for the Deaf (TTD) (202-452-3544), Dorothea 
Thompson, Board of Governors of the Federal Reserve System, Washington, 
DC 20551.

SUPPLEMENTARY INFORMATION: Proposal to approve under OMB delegated 
authority the extension with revision (or the implementation) of the 
following report(s):
    1. Report title: Annual Report of Foreign Banking Organizations; 
Structure Report of U.S. Banking and Nonbanking Activities, Foreign 
Banking Organization Confidential Report of Operations
    Agency form number: FR Y-7; FR Y-7A; FR 2068
    OMB Docket number: 7100-0125
    Frequency: Annual. FR Y-7A frequency annual, with changes after 
initial filing to be reported on a flow basis within 30 days of 
occurrence.
    Reporters: Foreign Banking Organizations
    Annual reporting hours: 13,244
    Estimated average hours per response: 20.5
    Number of respondents: 323
    Small businesses are not affected.
    General description of report: This information collection is 
mandatory [12 U.S.C. Secs. 1844(c), 3106, and 3108(a)]. Upon request 
from a respondent, certain information in the FR Y-7 and FR Y-7A may be 
given confidential treatment pursuant to the Freedom of Information Act 
(5 U.S.C. Secs. 552(b) (4) and (6)).
    The FR 2068 is a confidential report of operations that is exempted 
from public disclosure pursuant to the Freedom of Information Act, 5 
U.S.C. Sec. 552(b) (8) and 12 C.F.R. Sec. 261.11(h).

SUMMARY: The Board of Governors of the Federal Reserve System proposes 
to give approval, under delegated authority from the Office of 
Management and Budget (OMB), to the extension, with revisions, of the 
Annual Report of Foreign Banking Organizations (FR Y-7; OMB No. 7100-
0125) and the Foreign Banking Organization Confidential Report of 
Operations (FR 2068; OMB No. 7100-0125) for three years through 
December 31, 1997, and to discontinue the Notification Required 
Pursuant to Section 211.23h of Regulation K on Acquisitions by Foreign 
Banking Organizations (FR 4002; OMB No. 7100-0110). The FR Y-7 and FR 
2068 reports currently are scheduled to expire on May 31, 1995. The 
Federal Reserve proposes that the revisions be effective for reports 
covering the period ending December 31, 1994. The deadline for filings 
as of this date would be April 30, 1995. The Federal Reserve also 
proposes to collect information currently in Section II of the existing 
FR Y-7 and the FR 4002 in a new FR Y-7A, which will provide for more 
efficient collection of structure information.
    These reports reflect annual reporting requirements for foreign 
banking organizations that engage in banking in the United States 
either indirectly through a subsidiary bank, Edge corporation, 
agreement corporation, or commercial lending company, or directly 
through a branch or agency. The information contained in these reports 
is used by the Federal Reserve System to assess the foreign banking 
organization's ability to be a continuing source of strength to its 
U.S. banking operations and to determine compliance with U.S. laws and 
regulations. [[Page 1780]] 
    The Annual Report of Foreign Banking Organizations (FR Y-7) and the 
Foreign Banking Organization Confidential Report of Operations (FR 
2068) are filed as of the end of the reporter's fiscal year. These 
reports are filed by all foreign banking organizations that engage in 
the business of banking in the United States. The FR Y-7 collects 
information on the structure of their activities in the United States, 
as well as the following financial and managerial information: 
financial statements prepared in accordance with home country 
accounting principles and practices; separate financial statements for 
U.S. nonbanking subsidiaries; an organization chart reflecting 
investments in U.S. companies and foreign companies that do business in 
the United States; disclosure of large shareholders of registered 
shares and disclosure of known large shareholders of bearer shares; a 
list of officers and directors; information to determine continuing 
eligibility as a qualified foreign banking organization under sections 
2(h) and 4(c)(9) of the Bank Holding Company Act; and information on 
U.S. banking and nonbanking activities.
    A foreign banking organization is currently exempt from filing the 
FR 2068 if it meets certain criteria related to the size and type of 
its U.S. banking operations. This report collects information that 
enables the Federal Reserve System to carry out its responsibilities by 
assessing the impact of the worldwide operations of a foreign banking 
organization on its U.S. banking business. The FR 2068 currently 
requires disclosure of revenues and expenses as calculated in 
accordance with local accounting practices; it also requests an 
explanation or general description of the accounting practices used in 
the recognition and the timing of revenue and expense items. The report 
requests disclosure of loan loss experience, asset quality, gains and 
losses on securities, and hidden reserves not disclosed in the FR Y-7. 
The report provides flexibility to enable a foreign banking 
organization to submit requested information in a manner that will not 
impose any undue burden.
    The FR 2068 also collects financial data on non-U.S. subsidiaries. 
The report requires financial statements on all majority-owned, 
unconsolidated, material foreign subsidiaries. The report requires that 
foreign banking organizations with investments of between 25 and 50 
percent in material foreign companies provide financial data detailing 
the total assets, total stockholders' equity, and net income of such 
companies.
    Finally, the FR 2068 requires that reporters provide an 
organization chart that details all foreign companies that the foreign 
banking organization directly or indirectly owns, controls, or holds 
with power to vote 25 percent or more of any class of voting stock. 
This requirement differs from the organization chart required by the FR 
Y-7 in that the FR Y-7 is limited to all related U.S. companies and 
foreign companies that engage in business in the United States. In the 
instructions for both reports, foreign banking organizations are 
advised that they must request alternative reporting criteria when the 
specific reporting requirements would result in undue burden or expense 
or when the information is otherwise unavailable in the requested 
format.

Proposed Revisions

    The Federal Reserve proposes the following revisions to the FR Y-7 
report.
    (1) Move information collected in Section II of the current FR Y-7, 
Activities Conducted in the United States, to a new report: the FR Y-
7A, Structure Report on U.S. Banking and Nonbanking Activities, 
containing two report items: U.S. Banking Activities and U.S. 
Nonbanking Activities. Existing reporters would complete the FR Y-7A as 
of December 31, 1994; new FR Y-7 filers would complete the FR Y-7A at 
the time of their first filing. Subsequent changes would be reported 
within 30 days of the change.
    As a result, the FR 4002, Notification Pursuant to Section 
211.23(h) of Regulation K on Acquisitions by Foreign Banking 
Organizations (OMB No. 7100-0100), will no longer be needed.
    (2) Add a new schedule to the FR Y-7 report item 1, Financial 
Statements, that breaks out the details of a foreign banking 
organization's risk-based capital computations. Foreign banking 
organizations would have the option of providing this information in 
the FR 2068. For banks from countries that do not follow a risk-based 
capital format, information on their capital computations, as required 
by the home country banking supervisor(s), would be required.
    (3) Include with report item 1 copies of the foreign banking 
organizations' most recent 20-F filing with the SEC, if applicable.
    (4) Replace the existing free form financial statements for U.S. 
nonbank subsidiaries with specific schedules to gather core financial 
information that will be processed electronically. The proposed 
reporting format will include a principal schedule consisting of 
thirty-one balance sheet and income statement items (such as loans, 
securities, assets, capital, and income) and four supporting schedules. 
U.S. nonbanking subsidiaries with total assets of more than $1 billion 
would complete the principal and supporting schedules; U.S. nonbanking 
subsidiaries with total assets between $150 million and $1 billion 
would complete only the principal schedule; and U.S.nonbanking 
subsidiaries with total assets of less than $150 million would respond 
to only four core items: total assets, equity capital, net income, and 
total off-balance-sheet items.
    (5) Eliminate report item 5B which currently requires foreign 
banking organizations to report the ownership of shares by directors 
and officers of the foreign banking organization in that organization 
and each related company.
    (6) Expand the organization chart to identify U.S. companies that 
are owned by individuals who own 25 percent or more of the foreign 
banking organization.
    (7) Add several questions that require a yes or no response to 
assist the respondents in providing a complete report. These include 
questions relating to certification and consolidation of financial 
statements, home country requirements regarding the Basle Capital 
Accord and changes, if any, in accounting policies, and ownership of 
nonbank subsidiaries since the most recent filing of the FR Y-7.
    (8) Add a glossary as part of the FR Y-7 and FR 2068 instructions, 
and require that the general discussion provided by respondents of the 
accounting principles used in the preparation of the initial submission 
of the FR Y-7 be updated by all respondents every five years, beginning 
with the 1995 fiscal year filing.
    The Federal Reserve proposes the following revisions to the FR 2068 
report.
    (1) Eliminate the filing exemption for those foreign banking 
organizations with small U.S. operations. The exemption was made 
several years ago under the premise that ``small'' organizations, 
because of their size, would not pose a threat to the financial system. 
The Federal Reserve no longer supports this premise.
    (2) Eliminate the ``Earnings'' item on the current page 5.
    (3) Collect information on past due loans in a more comprehensive 
and consistent format.
    (4) As with the FR Y-7, expand the organization chart to include 
non-U.S. companies that are owned by [[Page 1781]] individuals who own 
25 percent or more of the foreign banking organization.
    (5) Change the official place of filing from the Board to the 
appropriate Federal Reserve Bank in a manner consistent with all other 
regulatory filings. This will promote more timely analysis of financial 
information by the Federal Reserve System.

Legal Status

    The Legal Division of the Board of Governors of the Federal Reserve 
System has determined that 12 U.S.C. Secs. 1844(c), 3106, and 3108(a) 
authorize the Federal Reserve to require each report.
    Upon request from a respondent, certain information in the FR Y-7 
and FR Y-7A may be given confidential treatment pursuant to the Freedom 
of Information Act (5 U.S.C. Secs. 552(b) (4) and (6)).
    All information provided in the FR 2068 report is confidential. The 
Legal Division, in consultation with the Department of Justice, has 
determined that the data are exempt from disclosure pursuant to section 
(b)(8) of the Freedom of Information Act (5 U.S.C. Sec. 552(b)(8)). 
Section (b)(8) provides exemption for information ``contained in or 
related to examinations, operating or condition reports prepared by, or 
on behalf of, or for the use of an agency responsible for the 
regulation or supervision of financial institutions.''


    Board of Governors of the Federal Reserve System, December 30, 
1994.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-269 Filed 1-4-95; 8:45 am]
BILLING CODE 6210-01-P