[Federal Register Volume 60, Number 237 (Monday, December 11, 1995)]
[Notices]
[Pages 63521-63526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30036]
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FEDERAL RESERVE SYSTEM
Agency Forms Under Review
Background
Notice is hereby given of the final approval of proposed
information collections by the Board of Governors of the Federal
Reserve System (Board) under OMB delegated authority, as per 5 C.F.R.
1320.9 (OMB Regulations on Controlling Paperwork Burdens on the
Public). The Federal Reserve may not conduct or sponsor, and the
respondent is not required to respond to, an information collection
that has been extended, revised, or implemented on or after October 1,
1995, unless it displays a currently valid OMB control number.
FOR FURTHER INFORMATION CONTACT:
Federal Reserve Board Clearance Officer--Mary M. McLaughlin--Division
of Research and Statistics, Board of Governors of the Federal Reserve
System, Washington, D.C. 20551 (202-452-3829)
OMB Desk Officer--Milo Sunderhauf--Office of Information and Regulatory
Affairs, Office of Management and Budget, New Executive Office
Building, Room 3208, Washington, D.C. 20503 (202-395-7340)
Final approval under OMB delegated authority of the extension, with
revisions, of the following reports:
1. Report title: Annual Report of Foreign Banking Organizations;
Foreign Banking Organization Structure Report on U.S. Banking and
Nonbanking Activities; and Foreign Banking Organization Confidential
Report of Operations
Agency form number: FR Y-7, FR Y-7A, and FR 2068
OMB Docket number: 7100-0125
Frequency: Annual
Reporters: Foreign banking organizations
Annual reporting hours: 13,243
Estimated average hours per response: 41
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
deemed confidential pursuant to sections b(4) and (b)(6) of the Freedom
of Information Act [5 U.S.C. Sec. 552]. All information provided in the
FR 2068 is confidential [5 U.S.C. Sec. 552(b)(8)] and is subject to
special handling procedures [12 CFR Sec. 261.11(h)].
These reports are required from all foreign banking organizations
(FBOs) engaged in the business of banking in the United States.
Respondents must report, on the FR Y-7, information on the structure of
their activities in the United States as well as financial statements
prepared in accordance with home country accounting 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, and a list of officers and directors.
The FR 2068 requires FBOs to report revenues and expenses, loan
losses, asset quality, hidden reserves not disclosed on the FR Y-7, an
organization chart, and financial data on non-U.S. subsidiaries that
the FBO controls. Respondents will continue to submit the FR 2068
directly with the Federal Reserve Board.
Abstract: On December 16, 1994, the Federal Reserve Board approved
earlier versions of these proposals for public comment and published
notice in the FR [Vol. 60, FR 1779, January 6, 1995]. The initial
comment period (30 days) expired on February 5, 1995. In light of the
extensive changes proposed, commenters requested three successive 30-
day extensions of the comment period in order to fully assess the
effects of the changes. As a result of those extensions, the final
comment period expired on May 31, 1995.
There were six commenters, four trade groups and two FBOs. The
nature of the comments varied. Some addressed burden, some concerned
confidentiality, and some suggested improvements to the reporting forms
and instructions. Comments regarding burden focused on the accuracy of
the overall burden estimate and on specific proposed revisions that
commenters believed would increase burden significantly.
After considering the comments, the Federal Reserve Board has
approved several modifications to the initial proposal.
Reporting Structure
FR Y-7
All FBOs engaged in the business of banking in the United States
file the FR Y-7 annually, as of the end of the reporter's fiscal year.
323 FBOs file the FR Y-7: 55 foreign bank holding companies; 218
foreign banks with commercial lending companies, Edge corporations, or
U.S. branches and agencies; and 50 foreign parent companies.
Respondents report information on the structure of their activities in
the United States, as well as the following financial and managerial
information:
[[Page 63522]]
(1) Financial statements prepared in accordance with home country
accounting practices.
(2) Separate financial statements for U.S. nonbanking subsidiaries.
(3) An organization chart reflecting investments in U.S. companies
and foreign companies that do business in the United States.
(4) Disclosure of large shareholders of registered shares and
disclosure of known large shareholders of bearer shares.
(5) A list of officers and directors.
(6) 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.
FR 2068
FBOs that have a significant presence in the United States also
file the FR 2068 annually. Prior to the latest revisions, FBOs with
small U.S. banking operations were eligible for a filing exemption.
While those exemptions were in effect there were 292 respondents.
Elimination of the exemption adds 31 respondents. The FR 2068 collects
information that enables the Federal Reserve to carry out its
responsibilities by assessing the impact of an FBO's worldwide
operations on its U.S. banking business. Prior to the latest revisions,
this report required disclosure of revenues and expenses as calculated
in accordance with local accounting practices and an explanation or
general description of those accounting practices. The report still
requires disclosure of loan losses, asset quality, gains and losses on
securities, and hidden reserves not disclosed in the FR Y-7. The format
calls for beginning balances, additions, deductions, and ending
balances. The report provides flexibility that enables an FBO to submit
the information in a manner that will minimize burden. Respondents may
request permission to report substitute information when the specific
reporting requirements would result in undue burden or expense or when
the information is unavailable in the requested format.
The FR 2068 also collects financial data on non-U.S. subsidiaries.
Financial statements are required on all majority-owned (more than 50
percent), unconsolidated, material foreign subsidiaries. FBOs also must
report financial data detailing the total assets, total stockholders'
equity, and net income of all material foreign companies in which it
owns between 25 percent and 50 percent of the shares or which it
otherwise controls.
The FR 2068 requires that reporters provide an organization chart
that details all foreign companies that the FBO directly or indirectly
owns, controls, or holds with power to vote 25 percent or more of any
class of voting stock. This requirement is broader than the
organization chart required by the FR Y-7 in that the latter is limited
to all related U.S. companies and foreign companies that engage in
business in the United States.
Changes Proposed Initially
FR Y-7
Several revisions were initially proposed for the FR Y-7: adding
the Nonbank Financial Information Summary (NFIS), financial statements
for each of the FBO's U.S. nonbanking subsidiaries, replacing the free-
form financial statements currently submitted; adding a new schedule to
collect information on risk-based capital; requiring submission of
documentation explaining differences in accounting standards in the
FBO's home country from U.S. accounting standards; requiring submission
of a copy of Securities and Exchange Commission (SEC) Form 20-F for
those respondents that report to the SEC; and replacing part of the FR
Y-7 with a new report, the FR Y-7A, to collect information on the
structure and activities of FBOs.
FR 2068
Initial proposed revisions to the FR 2068 included eliminating the
filing exemption for those FBOs with small U.S. operations; eliminating
earnings information; filing with the appropriate Federal Reserve Bank
rather than directly with the Board; and adding several items to
collect information on past due loans to replace similar information
previously submitted in a free format. For both the FR Y-7 and FR 2068
it was proposed that the organization chart be expanded to include U.S.
and non-U.S. companies owned by individuals who own 25 percent or more
of the FBO.
Public Comments and Federal Reserve Board Recommendations.
After considering the comments, the Federal Reserve Board made
several modifications to the initial proposed changes. Changes and
comments are discussed below in detail.
FR Y-7
Commenters addressed several matters regarding the FR Y-7,
including confidentiality, accounting standards, the organization
chart, bearer shareholdings, and the Nonbank Financial Information
Summary (NFIS.) There were no comments on the proposed new schedule for
risk-based capital.
Confidentiality procedures. Several commenters asked for advance
guarantee of confidentiality for the FR Y-7. If this request were to be
granted, commenters stated that certain affiliates may be more willing
to disclose information. Other commenters suggested that, although they
had no expectation that a request for confidential treatment would be
denied, the Board's existing procedure places them in an awkward
position when seeking information from affiliates. They also asked that
confidentiality be granted ``on request'' for NFIS information.
However, it is not possible to guarantee the confidentiality of this
information in light of the Freedom of Information Act, since
ultimately a court may be called on to decide the matter. Under the
applicable statutes and regulations, a foreign banking organization can
make a case for confidentiality by showing that disclosure is likely to
result in competitive harm or an invasion of personal privacy. The
Board will agree to grant a request for confidential treatment that is
properly supported with the understanding that if a Board decision to
deny a formal request for access to such information is challenged in
court, the court will decide the matter. In view of these
considerations, the Board decided to retain the current procedures
regarding confidentiality.
Explanation of national accounting standards. The Federal Reserve
Board initially recommended that a respondent include a detailed
explanation of national accounting standards and terminology with the
FR Y-7 in the first year it files and thereafter in every year ending
in ``5'' or ``0.'' This information would supplement the Board's
understanding of the differences in accounting standards. Commenters
requested that the Board clarify the scope of this proposed report
item. Several commenters stated that they were not aware of any
complete explanation of foreign accounting terminology and standards.
Another commenter requested that the Federal Reserve accept
explanations of the type filed with securities offerings statements
with the Securities and Exchange Commission (SEC.) Another suggested
that FBOs be permitted to submit a statement of material differences
between Generally Accepted Accounting Principles (GAAP) and home
country accounting requirements. After reviewing these comments, the
Federal Reserve decided to drop the proposed report item, and will
instead collect this information on an ad hoc
[[Page 63523]]
basis. Respondents that are SEC reporters must include a copy of SEC
form 20-F (OMB No. 3235-0288) with the FR Y-7. The SEC form 20-F is
similar to SEC form 10-K (Annual Report Pursuant to Sections 13 and
15(d) of the Securities and Exchange Act of 1934; OMB No. 3235-0063)
and includes information on the differences between GAAP and the FBO's
home country accounting standards.
Bearer shareholdings. Two commenters stated that they may be unable
to identify bearer shareholders that have a greater than 5 percent
interest in their organization. However, since Item 4 collects
information on ``known shareholders'' there is no need to change this
report item.
Risk-based capital schedule. No comments were received on this
aspect of the proposal. This schedule breaks out details of an FBO's
risk-based capital computations. If this information is confidential in
the home country, the FBO 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 capital computations
required by their home country banking supervisor(s) would be required.
Q and A checkboxes. No comments addressed the proposal to add
several questions that require either a yes or no response, or a box to
check, to assist the respondents in providing a complete report and to
assist Federal Reserve Banks in their review and analysis. The
checkboxes will reduce the need for follow-up correspondence with
respondents.
Nonbank Financial Information Summary (NFIS). The Federal Reserve
will collect summary financial information on U.S. nonbank subsidiaries
of FBOs on the NFIS. The free-form financial statements for U.S.
nonbank subsidiaries have been replaced by specific schedules of core
financial information that will be processed electronically. The new
reporting format includes a principal schedule of thirty-three balance
sheet and income statement items (such as loans, securities, assets,
capital, and income) and four supporting schedules with a total of
forty-one items. Nonbanking subsidiaries with total assets of more than
$1 billion must complete the principal and supporting schedules;
nonbanking subsidiaries with total assets between $150 million and $1
billion must complete only the principal schedule; and nonbanking
subsidiaries with total assets of less than $150 million must respond
only to six core items on the principal schedule; these items are
denoted by an asterisk on the reporting form. This information will
enable the Federal Reserve to better assess the condition of the U.S.
nonbank financial activities of foreign banking organizations.
Commenters made several suggestions regarding the NFIS including
exempting various types of companies from reporting, clarifying the
instructions, and eliminating one item from the schedule. Each of the
comments is discussed below.
Exemptions from NFIS reporting. Two commenters requested exemptions
for Regulation K, section 211.23(f)(3) (incidental activities)
companies and another commenter suggested that the Board exempt section
4(c)(8) subsidiaries of section 2(h) (of the Bank Holding Company Act)
companies from filing the NFIS because section 2(h) companies are
themselves exempt. These commenters also requested that section 4(c)(9)
companies be exempt from filing the NFIS. However, section 4(c)(8) and
section 4(c)(9) companies are active financial entities in the United
States and are subject to the same rules as U.S. subsidiaries operating
under the Bank Holding Company Act. The incidental activities covered
under section 211.23(f)(3) typically involve brokerage, investment
advisory, and foreign exchange operations. The Federal Reserve believes
that the NFIS information should be provided on these companies because
they are engaged in financial activities in the United States and their
parent FBOs are subject to supervision and regulation by the Federal
Reserve. Thus, the Board believes that 4(c)(8), 4(c)(9), and
incidental-activities companies should file the NFIS.
A commenter suggested that companies whose shares are held by the
FBO as a result of debts previously contracted or in a fiduciary
capacity should be exempt from filing the NFIS. The Board agrees that
individual holdings should be exempt. However, DPC subsidiaries and
companies formed specifically to hold fiduciary entities should file in
the same manner as other companies.
Submitting a consolidated NFIS. A commenter stated that the Board
proposed to significantly limit the conditions under which NFIS
statements can be submitted on a consolidated basis, and asked that
FBOs not be required to seek annual prior approval from Federal Reserve
Banks. Rather, they favored gaining initial approval once those
conditions were met and for as long as they remained in effect. This
commenter further requested that Federal Reserve Banks be given the
discretion to make exceptions to the consolidation rules. The Federal
Reserve concurred and has amended the NFIS instructions.
Book value of nonbank subsidiaries on the NFIS. Five commenters
noted that the amount at which a nonbank subsidiary is carried on the
books of the FBO is highly confidential in some countries and should be
collected in the FR 2068. After review, the Board decided that this
information is not critical, and deleted the item from the form.
Fiscal-year reporting on the NFIS. A commenter asked that the Board
clarify in the instructions to the NFIS that financial information may
be prepared as of the end of the fiscal year of the nonbank subsidiary
and not as of the end of the fiscal year of the FBO. The instructions
have been clarified.
FR Y-7A
The FR Y-7A will collect structure information that was previously
reported in Section II of the FR Y-7. Apart from making this a stand-
alone report, two initially proposed revisions to the collection
process were to collect the information on a flow basis and to
implement exception reporting. Flow-basis reporting would have allowed
the Federal Reserve to recommend eliminating the FR 4002. Commenters
indicated that flow-basis reporting would be very burdensome. The
Federal Reserve agreed that flow basis reporting would be burdensome
and dropped this revision. However, this required dropping the proposal
to discontinue the FR 4002. Annual exception reporting is designed to
reduce burden and will be implemented. Annual exception reporting
requires completing the entire FR Y-7A only once. In subsequent years,
the Federal Reserve Bank will provide the FBO with a printout of its
previously submitted structure information. The FBO will review the
printout and annotate the information to indicate changes, instead of
completing an entire report each year. This is helpful for those banks
whose operations are not highly automated, and also may ease the burden
of translating the report into English. Other comments included a
request to modify Regulation K to exempt certain holdings from
reporting, to refine the General Instructions of the FR Y-7A, and to
clarify the instructions on reporting DPC shareholdings, fiduciary
holdings, and dormant companies.
Flow-basis reporting. The Federal Reserve reviews the structure and
activities of FBOs to determine if they are in compliance with
applicable statutes and regulations. The Board initially proposed
collecting information in Section II (``Activities Conducted in the
United States'') of the
[[Page 63524]]
old FR Y-7 in a stand-alone report, the FR Y-7A, which would consist of
two items: ``U.S. Banking Activities'' and ``U.S. Nonbanking
Activities.'' The Board further proposed that existing reporters
complete both items in the first year and that new reporters complete
both items at the time of their first filing. Subsequent changes in the
information originally provided would be reported to the appropriate
Federal Reserve Bank on a flow basis; that is, within thirty calendar
days of such changes.
However, commenters objected to the burden associated with flow-
basis reporting and asked that current reporting requirements be
continued. They stated that the proposed reporting requirements would
be very burdensome, particularly since FBOs would need to poll their
affiliates regularly to determine organizational changes. They stated
that not every structure and activity change is regularly reported to
the parent organization. In addition, although the statutory control
threshold is 25 percent or more in the United States, the control
threshold in many other nations is 50 percent. Under U.S. statutes,
when ownership of an affiliate reaches 25 percent, the affiliate would
normally be considered a subsidiary, but in other countries it might be
considered an ``investment''. The FBO may not have the legal authority
to require information from an affiliate in which its ownership is only
25 percent.
Although the Federal Reserve would prefer to have this information
reported as changes occur, the burden on the reporters outweighs the
benefits to the Federal Reserve of receiving it within thirty calendar
days of each change. Accordingly, the Board dropped the proposal to
require flow-basis reporting. However, structure changes that require
monitoring for compliance with the Bank Holding Company Act must
continue to be reported within thirty days of the end of each quarter
on the FR 4002, as required by Regulation K; all other changes must be
reported annually on the FR Y-7A.
Request to modify Regulation K. A commenter stated that the costs
of flow basis reporting would exceed the benefits of discontinuing the
FR 4002, and requested modification of section 211.23(h) of Regulation
K. Section 211.23(h) requires reporting, within thirty days of the end
of a quarter, of all newly acquired shares of companies engaging in
activities in the United States or of any U.S. activities commenced by
companies in which the FBO already owns shares. Thus, this section
requires the FBO to report information collected in the FR 4002. The
requested modification would exempt respondents from reporting
investments or activities permitted under section 211.23(f)(5),
activities that are not incidental to international banking.
Reporting of non-voting equity interests in excess of 25 percent of
any class of non-voting shares. The Federal Reserve initially
recommended that FBOs report on the FR Y-7A investments of 25 percent
or more of any class of non-voting equity of banks, bank holding
companies, and other companies. Commenters said that reporting should
not be required since the statutory control indicia normally do not
apply to non-voting shares. The Board disagreed and remains concerned
with foreign ownership of U.S. financial institutions of this
magnitude, irrespective of the non-voting status of the shares. Several
commenters indicated that reporting such non-voting interests in U.S.
companies, other than banks and bank holding companies, would represent
a significant increase in burden. In the interest of reducing burden,
reporting will be limited to U.S. banks and bank holding companies,
including all types of non-voting interests such as ``equity kickers''.
This conforms to the reporting requirements of the Bank Holding Company
Report of Changes in Investments and Activities (FR Y-6A; OMB No. 7100-
0124) for domestic bank holding companies. One commenter requested that
if non-voting equity interests must be reported then the requirement
not be made retroactive. The Board decided to make the requirement
retroactive so that the Federal Reserve will be cognizant of all such
control situations. If an FBO cannot produce this information in a
timely manner, a reasonable extension of time may be granted.
Reporting of shares held as a result of debts previously
contracted. Comments were made on two revisions to how DPCs are
reported. One commenter objected to the amount of information required
about each DPC and proposed that the Board require only a listing of
such holdings. The Board did not agree that a simple listing would
provide sufficient information for monitoring these holdings. Another
commenter stated that lowering the threshold for reporting DPCs, from
ownership or control of 25 percent of any class of voting shares to
ownership or control of 5 percent, is burdensome, especially when non-
U.S. companies are involved, and asked that the 5 percent threshold be
applied to only U.S. banking and nonbanking offices and subsidiaries.
The commenters noted that in addition to the increase in the number of
reportable holdings, the information would be difficult to obtain
because these companies may be located worldwide. Further, the FBO may
not have the authority to require these companies to share information.
The Board decided to lower the threshold to 5 percent to ensure
consistent treatment of domestic and foreign banking organizations
(``national treatment'') and to maintain consistency with FR Y-6A
reporting requirements.
General Instructions. A commenter recommended clarifying the
General Instructions to the FR Y-7A to distinguish companies that do
business in the United States from those that have no U.S. presence,
suggesting that the reporting requirements apply only to all U.S.
companies and those non-U.S. companies that engage in business in the
United States. The Board agreed and made the clarification. Another
commenter noted that the list of reportable companies on page 1 of the
instructions to the FR Y-7A is confusing and asked that it be
eliminated. The Board has clarified the instructions. Two other
commenters asked that the term ``manages'' be deleted from the
definition of control since the term's definition differs from the
statutory definition. In considering this comment, the Board determined
that the instruction was redundant and deleted it.
Instructions on shares held in a fiduciary capacity. A commenter
suggested that the Board modify the General Instructions to the FR Y-7A
so the instructions state more explicitly the requirement that FBOs
disclose fiduciary holdings of shares only under either of the
following two conditions:
(1) More than 5 percent of the shares of a company are held in a
fiduciary capacity for the benefit of the foreign banking organization,
its shareholders, or its employees; or
(2) More than 5 percent of the shares in U.S. banks and bank
holding companies are held in a fiduciary capacity by a subsidiary of
the foreign banking organization that has the sole discretion to vote
the shares.
This commenter also asked that the Board revise the instructions so
that fiduciary holdings held for the benefit of employees or
shareholders are reported only if they are held for the employees or
shareholders as a class. The Board believes that the instructions
adequately address the statutory and regulatory factors regarding
fiduciary holdings. These instructions are similar to those provided
for bank holding company reporters and therefore are consistent with
the policy of national treatment.
[[Page 63525]]
Instructions on reporting of shares held in dormant companies. A
commenter requested that the Federal Reserve not require reporting of
dormant companies in the FR Y-7A and suggested instead to require an
FBO to report the cessation and re-commencement of a business activity.
However, the disposition of such holdings would not be known if the FBO
stopped reporting them. Such holdings need not be reported until the
company becomes active, but once active, it must be reported until
divested, even if it becomes dormant again.
FR 2068
Five revisions were proposed for the FR 2068. After reviewing
comments, one change was dropped and another was modified.
Filing exemption. The Federal Reserve eliminated the filing
exemption for small companies in light of financial problems that
developed in financial institutions with a relatively small presence in
the United States. This added thirty-one respondents to the panel.
Earnings item. The Federal Reserve eliminated earnings information
from the FR 2068 because this information is reported in the FR Y-7.
Past due loans. FBOs now must report specified information on past
due loans to replace similar information previously submitted on a
free-form basis in the FR 2068. The initial proposal provided three
alternative methods for reporting this information. This has been
reduced to two alternatives, with no loss of flexibility for the
respondent, by rewording the instructions. An FBO may submit either an
abbreviated table of information which is similar to that collected
from domestic banks, or it may submit the same type of information that
is provided to its home country supervisor. Notwithstanding these
alternatives, a commenter noted that certain banks do not routinely
collect this information on a past-due basis, but on the basis of
whether interest is accruing. The Federal Reserve believes that the
instructions for the past-due loans item provide sufficient
flexibility; furthermore, the General Instructions to the FR 2068 state
that FBOs may request permission to provide substitute information when
undue burden is imposed by a particular item.
Filing directly with the Board. A proposed revision to the filing
procedures of the FR 2068 would have required the FBO to submit the
information to the appropriate Federal Reserve Bank rather than
directly to the Board. The procedure of filing directly with the Board
was developed because the FBOs desired strict confidentiality. Several
commenters strongly advocated that this procedure be retained. One
commenter, although not in objection to filing with Federal Reserve
Banks, asked that the same security standards used by the Board be
implemented at the Federal Reserve Banks. Specifically, the commenter
requested that only one Federal Reserve Bank receive a copy of the FR
2068, that the Federal Reserve Banks not permit other regulators to
have access to the information, and that secure areas be set up for
storing the information. In response to these comments, the Board has
decided that the procedure of filing with the Board be retained.
Expanded organization chart. The organization chart provides a
listing of all corporate components of the foreign banking
organization. The Federal Reserve initially proposed reporting both
U.S. and non-U.S. interests of the principal shareholders of the FBO.
Commenters noted that this requirement would significantly increase
burden, and asked that the organization chart show only those foreign
interests that are directly or indirectly engaged in business in the
United States. Commenters also noted that a foreign banking
organization normally cannot compel a shareholder to disclose personal
information. In response to comments regarding burden and possible
legal constraints with respect to collection of information on non-U.S.
entities, the Federal Reserve dropped this reporting requirement with
regard to strictly non-U.S. companies.
General Comments
Commenters addressed several matters regarding both the FR Y-7 and
the FR 2068, including the reporting universe, implementation date, and
glossary.
Instructions - Who Must Report. In response to a commenter, the
following clarification has been added to the introduction to the
General Instructions: ``The Annual Report of foreign banking
organizations is required to be filed by companies that are directly or
indirectly engaged in the business of banking in the United States.''
Also, the term ``organized under the laws of a foreign country'' was
deleted from the ``Who Must Report'' section, because an FBO could be
organized, for example, under Delaware laws, and operate overseas and
in the United States. The instructions thus revised will conform to the
statutory definition of a required reporter.
Implementation date. A commenter requested that the NFIS section of
the FR Y-7 and the FR Y-7A be implemented as of December 31, 1995. This
request will be accommodated because the Board intends to use this
implementation date for all sections of the reports. FBOs whose fiscal
years end prior to December 30, 1995, will use the existing FR Y-7 and
FR 2068 forms.
Glossary. A glossary has been prepared as part of the instructions
to clarify certain terms and to reduce the number of footnotes in the
forms. In response to comments, the Federal Reserve expanded the
glossary to provide information on applicable statutes and regulations,
defined additional terms, and clarified several definitions.
Respondent Burden. Commenters provided various burden estimates,
all of which were substantially higher than the Federal Reserve
estimates. One commenter stated that the Federal Reserve's combined
burden estimate for the FR Y-7 and FR 2068 of 41 hours was much lower
than the actual time spent by some FBOs. However, this commenter's
estimate represented the burden on some of the larger and more complex
organizations. The Federal Reserve's burden estimates are an average
across all sizes of institutions and incorporate the higher burdens of
large institutions. The Federal Reserve believes that the original
proposal, having been substantially modified in response to comments,
does not significantly increase the burden averaged across all 323
respondents.
Apart from total burden estimates, there were three specific
proposed changes that commenters stated would significantly increase
burden. One of these proposed changes was dropped and one was scaled
back.
(1) The proposal that structure changes be reported on the proposed
FR Y-7A on a flow basis, that is, within thirty days of their
occurrence, was considered quite burdensome by commenters. The Federal
Reserve decided not to require flow-basis reporting and dropped the
proposal to discontinue the FR 4002, in which structure changes are
reported quarterly.
(2) The proposal that FBOs report, in the FR Y-7A, investments of
25 percent or more of any class of non-voting equity of any company was
scaled back. Now respondents report only such investments in U.S. banks
and bank holding companies.
(3) In the existing FR Y-7, an FBO must report each company in
which it owns or controls 25 percent or more of any class of voting
shares as a result of debts previously contracted. The Federal Reserve
changed the threshold
[[Page 63526]]
at which these shares are reportable, from 25 percent to 5 percent.
The burden estimate for the existing FR Y-7 is 19.5 hours per
response. Based on that estimate, along with net new burden, the
Federal Reserve estimates that the collective burden for the FR Y-7 and
FR Y-7A increased by one hour, to 20.5 hours per response. Considered
separately, burden for the FR Y-7 is 12.0 hours and the FR Y-7A is 8.5
hours. The burden estimate for the FR 2068 is unchanged from 20.5 hours
per response.
Final approval under OMB delegated authority of the extension,
without revision, of the following report:
2. Report title: Notification Pursuant to Section 211.23(h) of
Regulation K on Acquisitions by Foreign Banking Organizations
Agency form number: FR 4002
OMB Docket number: 7100-0110
Frequency: On occasion
Reporters: Foreign Banking Organizations
Annual reporting hours: 80
Estimated average hours per response: 0.5
Number of respondents: 160
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)].
This report is required within thirty days of the end of a quarter
during which an FBO acquires shares of a company that engages, directly
or indirectly, in business in the United States, or during which a
foreign subsidiary of the FBO commences direct activity in the United
States.
Abstract: The Federal Reserve, in its original proposal to revise
the FR Y-7 and FR 2068, proposed to eliminate the FR 4002, because
proposed changes to the FR Y-7 would have made the FR 4002 redundant.
(See Vol. 60, FR 1779, January 5, 1995.) After review of public
comments, the Federal Reserve modified the originally proposed
revisions to the FR Y-7 such that it became necessary to retain the FR
4002.
Board of Governors of the Federal Reserve System, December 5,
1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-30036 Filed 12-8-95; 8:45 am]
Billing Code 6210-01-F