[Federal Register Volume 66, Number 87 (Friday, May 4, 2001)]
[Notices]
[Pages 22556-22559]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-11164]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Submission for OMB 
Review; Comment Request

AGENCY: Board of Governors of the Federal Reserve System (Board).

ACTION: Notice of information collection to be submitted to OMB for 
review and approval under the Paperwork Reduction Act of 1995.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35), the Board, the Federal Deposit 
Insurance Corporation (FDIC), and the Office of the Comptroller of the 
Currency (OCC) (the ``agencies'') may not conduct or sponsor, and the 
respondent is not required to respond to, an information collection 
unless it displays a currently valid Office of Management and Budget 
(OMB) control number. The Board hereby gives notice that it plans to 
submit to the Office of Management and Budget (OMB) on behalf of the 
agencies a request for review of the information collection system 
described below. The agencies 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.
    On December 28, 2000, the agencies, under the auspices of the 
Federal Financial Institutions Examination Council (FFIEC), requested 
public comment for 60 days on the revision, without extension, of the 
currently approved information collection: the Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002). 
The comment period expired February 26, 2001.

DATES: Comments must be submitted on or before June 4, 2001.

ADDRESSES: Interested parties are invited to submit written comments to 
the agency listed below. All comments, which should refer to the OMB 
control number, will be shared among the agencies.
    Written comments should be addressed to Jennifer J. Johnson, 
Secretary, Board of Governors of the Federal Reserve System, 20th and C 
Streets, NW., Washington, DC 20551, submitted by electronic mail to 
[email protected], or delivered to the Board's mailroom 
between 8:45 a.m. and 5:15 p.m., and to the security control room 
outside of those hours. Both the mailroom and the security control room 
are accessible from the courtyard entrance on 20th Street between 
Constitution Avenue and C Street, NW. Comments received may be 
inspected in room M-P-500 between 9:00 a.m. and 5:00 p.m., except as 
provided in section 261.12 of the Board's Rules Regarding Availability 
of Information, 12 CFR 261.12(a).
    A copy of the comments may also be submitted to the OMB desk 
officer for the Board: Alexander T. Hunt, 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 draft copy of the revised FFIEC 002 
reporting form may be obtained at the FFIEC's web site (www.ffiec.gov). 
A copy of the revisions to the collection of information may also be 
requested from Mary M. West, Federal Reserve Board Clearance Officer, 
(202) 452-3829, Division of Research and Statistics, Board of Governors 
of the Federal Reserve System, 20th and C Streets, NW., Washington, DC 
20551. Telecommunications Device for the Deaf (TDD) users may contact 
Capria Mitchell (202) 872-4984, Board of Governors of the Federal 
Reserve System, 20th and C Streets, NW., Washington, DC 20551.

SUPPLEMENTARY INFORMATION: Proposal to revise the following currently 
approved collection of information:
    Report Title: Report of Assets and Liabilities of U.S. Branches and 
Agencies of Foreign Banks.
    Form Number: FFIEC 002.
    OMB Number: 7100-0032.
    Frequency of Response: Quarterly.
    Affected Public: U.S. branches and agencies of foreign banks.
    Estimated Number of Respondents: 354.
    Estimated Total Annual Responses: 1,416.
    Estimated Time per Response: 22.50 burden hours.
    Estimated Total Annual Burden: 31,860 burden hours.

General Description of Report

    This information collection is mandatory: 12 U.S.C. 3105(b)(2), 
1817(a) (1) and (3), and 3102(b). Except for select sensitive items, 
this information collection is not given confidential treatment (5 
U.S.C. 552(b)(8)). Small businesses (that is, small U.S. branches and 
agencies of foreign banks) are affected.

Abstract

    On a quarterly basis, all U.S. branches and agencies of foreign 
banks (U.S. branches) are required to file detailed schedules of assets 
and liabilities in the form of a condition report and a variety of 
supporting schedules. This information is used to fulfill the 
supervisory and regulatory requirements of the International Banking 
Act of 1978. The data are also used to augment the bank credit, loan, 
and deposit information needed for monetary policy and other public 
policy purposes. The Federal Reserve System collects and processes this 
report on behalf of all three agencies.

Current Actions

    The agencies received one comment in response to the notice 
published in the Federal Register on December 28, 2000, (65 FR 82356) 
requesting public comment on the extension with revision of this 
information collection. The commenter supports the revisions to the 
FFIEC 002.

[[Page 22557]]

    The agencies will implement a number of revisions to streamline the 
existing reporting requirements of the Report of Assets and Liabilities 
of U.S. Branches and Agencies of Foreign Banks (FFIEC 002), consistent 
with eliminations and reductions in detail to the Reports of Condition 
and Income (Call Report) (FFIEC 031 and 041) filed by insured 
commercial banks and FDIC-supervised savings banks. The agencies are 
also endeavoring to improve the relevance of the FFIEC 002 by 
identifying new types of information necessary to monitor new 
activities and other recent developments that may expose institutions 
to new or different types of risk.
    The revisions to the FFIEC 002 summarized below have been approved 
by the FFIEC. The agencies will implement these changes, except for new 
information on fiduciary and related services, as of the June 30, 2001, 
reporting date. New information on fiduciary and related services will 
be effective with the December 31, 2001, reporting date.

A. Specific Deletions, Reductions in Detail, and Redefinitions

Schedule RAL--Assets and Liabilities
    1. For item 1.d, ``Federal funds sold and securities purchased 
under agreements to resell,'' combine items 1.d.(1), ``With U.S. 
branches and agencies of other foreign banks,'' and 1.d.(2), ``With 
other commercial banks in the U.S.,'' into a single line item.
    2. For item 4.b, ``Federal funds purchased and securities sold 
under agreements to repurchase,'' combine items 4.b.(1), ``With U.S. 
branches and agencies of other foreign banks,'' and 4.b.(2), ``With 
other commercial banks in the U.S.,'' into a single line item.
    3. Memorandum item 9, ``Mutual fund and annuity sales during the 
quarter,'' will be redefined as ``Assets under the reporting branch or 
agency's management in proprietary mutual funds and annuities.'' For 
branches and agencies with proprietary mutual funds and annuities, 
reporting the amount of assets under management should be significantly 
less burdensome than reporting the quarterly sales volume of both 
proprietary products and nonproprietary products. Branches and agencies 
without proprietary mutual funds and annuities will no longer need to 
report any information on their involvement with these products.
    4. Memorandum item 12, ``Amount of assets netted against 
liabilities to nonrelated parties (excluding deposits in insured 
branches) on the balance sheet in accordance with generally accepted 
accounting principles,'' will be eliminated.
    5. Statutory or Regulatory Requirement item S.3.a, ``FDIC asset 
maintenance requirement (for FDIC insured branches only): Average 
liabilities,'' currently collects average liabilities for the quarter 
ending on the report date. The agencies will redefine this item to 
collect average liabilities for the calendar quarter preceding the 
quarter ending on the report date. This redefinition will ensure that, 
as of a given report date, the asset maintenance requirement 
calculation for FDIC-insured branches in Section 347.211 of the FDIC's 
regulations can be accomplished by using only data filed on the current 
FFIEC 002 report. For example, using the FFIEC 002 report for the third 
quarter, eligible assets on the last day of the third quarter (reported 
in item S.3.b) will be divided by average liabilities for the second 
quarter (reported in item S.3.a).
Schedule A--Cash and Balances Due from Depository Institutions
    Memorandum item 1, ``Noninterest-bearing balances due from 
commercial banks in the U.S. (including their IBFs),'' will be deleted.
Schedule C--Loans
    The separate loan categories for ``Loans to depository 
institutions'' and ``Acceptances of other banks'' (items 2 and 5, 
respectively) will be combined.
Schedule E--Deposit Liabilities and Credit Balances
    1. The reporting of demand deposits by category of depositor in 
column B of the body of the deposits schedule will be eliminated, with 
branches and agencies reporting instead only the total amount of their 
demand deposits in this column. Branches and agencies will continue to 
provide a category-by-category breakdown of their total transaction 
accounts in column A, which includes their demand deposits, but the 
current duplicate reporting of demand deposits by category in both 
columns A and B will end.
    2. Item 6, ``Certified and official checks,'' will be combined with 
deposits of ``Individuals, partnerships, and corporations'' (item 1).
Schedule L--Derivatives and Off-Balance-Sheet Items
    1. Item 6, ``Participations in acceptances acquired by the 
reporting (non-accepting) branch or agency,'' will be deleted.
    2. Item 11.b for the gross notional amount of derivative contracts 
held for purposes other than trading that are not marked to market will 
be deleted. All derivative contracts, including those held for purposes 
other than trading, will be marked to market once a branch or agency 
adopts FASB Statement No. 133, Accounting for Derivative Instruments 
and Hedging Activities, which is effective for fiscal years beginning 
after June 15, 2000. Thus, item 11.b will no longer have any relevance 
in 2001.
    3. For branches and agencies with $100 million or more in total 
assets: Items 12.c.(1) and (2) for the gross positive and gross 
negative fair values of derivatives held for purposes other than 
trading that are not marked to market will be deleted because of the 
effect of FASB Statement No. 133.
Schedule M--Due From/Due to Related Institutions in the U.S. and in 
Foreign Countries: Part V, Derivatives and Off-Balance Sheet Items With 
Related Depository Institutions
    1. Item 6, ``Participations in acceptances acquired from related 
depository institutions by the reporting (non-accepting) branch or 
agency,'' will be deleted.
    2. Item 11.b for the gross notional amount of derivative contracts 
held for purposes other than trading that are not marked to market will 
be deleted. All derivative contracts, including those held for purposes 
other than trading, will be marked to market once a branch or agency 
adopts FASB Statement No. 133, Accounting for Derivative Instruments 
and Hedging Activities, which is effective for fiscal years beginning 
after June 15, 2000. Thus, item 11.b will no longer have any relevance 
in 2001.
    3. For branches and agencies with $100 million or more in total 
assets: Items 12.c.(1) and (2) for the gross positive and gross 
negative fair values of derivatives held for purposes other than 
trading that are not marked to market will be deleted because of the 
effect of FASB Statement No. 133.
Schedule N--Past Due, Nonaccrual, and Restructured Loans
    Memorandum item 2.b, ``Replacement cost of [past due derivative] 
contracts with a positive replacement cost,'' will be deleted. Once 
branches and agencies adopt FASB Statement No. 133, Accounting for 
Derivative Instruments and Hedging Activities, all of their derivative 
contracts will be carried on the balance sheet at fair value. Since the 
replacement cost of a derivative contract is its fair value and its 
book value will also be its fair value, Memorandum items 2.a, ``Book 
value of amounts carried as assets,'' and 2.b will duplicate

[[Page 22558]]

each other. The caption for Memorandum item 2.a will be revised to read 
``Fair value of amounts carried as assets.''

B. New Information

Securitization and Asset Sale Activities
    The agencies will revise and expand the information collected in 
the FFIEC 002 report to facilitate more effective analysis of the 
impact of securitization and asset sale activities on credit exposures. 
In this regard, the agencies are proposing to introduce a separate new 
schedule (Schedule S) that will comprehensively capture information 
related to securitization and asset sale activities.
    Under this proposal, branches and agencies involved in 
securitization and asset sale activities will report quarter-end data 
for seven loan and lease categories. These data will cover 1-4 family 
residential loans, home equity lines, credit card receivables, auto 
loans, other consumer loans, commercial and industrial loans, and all 
other loans and all leases. For each loan category, branches and 
agencies will report: (1) The outstanding principal balance of assets 
sold and securitized with servicing retained or with recourse or 
seller-provided credit enhancements, (2) the maximum amount of credit 
exposure arising from recourse or credit enhancements to securitization 
structures (separately for those sponsored by the reporting branch or 
agency and those sponsored by other institutions), (3) the past due 
amounts on the underlying securitized assets, (4) the amount of any 
commitments to provide liquidity to the securitization structures, (5) 
the outstanding principal balance of assets sold with servicing 
retained or with recourse or seller-provided credit enhancements that 
have not been securitized, and (6) the maximum amount of credit 
exposure arising from assets sold with recourse or seller-provided 
credit enhancements that have not been securitized.
    A limited amount of information will also be collected on credit 
exposures to asset-backed commercial paper conduits. For the home 
equity line, credit card receivable, and the commercial and industrial 
loan categories, branches and agencies will also report the amount of 
any ownership (or seller's) interests in securitizations that are 
carried as securities and as loans and the past due amounts on the 
assets underlying the seller's interests carried as securities.
    Although the new schedule will collect a considerable amount of 
information on these securitization activities, Schedule S will not 
affect most branches and agencies and the increase in reporting burden 
associated with the schedule's new information will be confined to a 
relatively small segment of the industry.
    On a related matter, the agencies will collect information to 
facilitate more effective assessments of credit and other exposures 
related to branch and agency portfolios of asset-backed securities. 
Currently all asset-backed securities are reported in Schedule RAL, 
item 1.b, ``U.S. Government securities,'' or item 1.c, ``Other bonds, 
notes, debentures, and corporate stock (including state and local 
securities),'' depending on the issuer or guarantor. The agencies will 
add two new items on Schedule RAL to segregate branch and agency 
holdings of mortgage-backed securities and other asset-backed 
securities. Collection of this information will promote risk-focused 
supervision by enhancing the agencies' ability to assess credit 
exposures and asset concentrations.
Reporting of Trust Data
    The agencies will change the manner in which branches and agencies 
report information on their trust activities. Branches and agencies 
that file the existing Annual Report of Trust Assets (FFIEC 001) will 
instead file a new Fiduciary and Related Services Schedule (Fiduciary 
Schedule) (Schedule T) as part of the FFIEC 002. Under this proposal, 
branches and agencies that have fiduciary or related activity will be 
required to report certain trust information in Schedule T annually as 
of December 31.\1\ This information includes the number of accounts and 
the market value of trust assets for eight categories of fiduciary 
activities. These institutions will also report data on corporate trust 
activities, collective investment funds and common trust funds, and 
types of managed assets held in personal trust and agency accounts.
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    \1\ This FFIEC 002 proposal does not address the trust reporting 
requirements that would be applicable to entities other than U.S. 
branches and agencies of foreign banks.
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    In creating Schedule T, modifications have been made to some of the 
existing items currently reported on the FFIEC 001 to improve their 
value and usefulness. However, the total number of separately 
reportable data items in the Fiduciary Schedule represents a decrease 
of more than 60 percent in the number of reportable items in the FFIEC 
001. Thus, the agencies believe this proposal will not produce an 
increase in reporting burden for trust institutions.
    The agencies are proposing to add the new Fiduciary Schedule to the 
FFIEC 002 instead of retaining separate trust reports in order to 
facilitate the timely collection and processing of the information. 
Institutions filing the current annual trust reports generally must 
submit their reports within 45 days after year-end. Electronically 
submitted annual trust reports, first allowed for year-end 1998 
reporting, have a 75-day filing deadline. By moving the reporting of 
fiduciary information into the FFIEC 002, the submission deadline for 
the FFIEC 002 will apply to this reporting requirement. The length of 
time that trust institutions will have for completing the Fiduciary 
Schedule will be reduced from 45 days to 30 days for most institutions 
and from 75 days to 30 days for institutions that file electronically. 
The implementation of this Fiduciary Schedule and the modification of 
the submission deadline for this reporting requirement is consistent 
with the reporting treatment currently for insured commercial banks and 
FDIC-supervised savings banks.

C. Other Issue for Which Public Comment Is Requested

Eliminating Confidential Treatment for Certain Past Due and Nonaccrual 
Data
    An important public policy issue for the agencies has been how to 
use market discipline to complement supervisory resources. Market 
discipline relies on market participants having information about the 
risks and financial condition of banking organizations. Disclosure that 
increases transparency should lead to more accurate market assessments 
of risk and value. This, in turn, should result in more effective 
market discipline on banking organizations.
    Despite this emphasis on market discipline, the FFIEC and the 
agencies currently accord confidential treatment to the information 
branches and agencies report in Schedule N of the FFIEC 002 report on 
the amounts of their loans, leases, and other assets that are past due, 
in nonaccrual status, or restructured and in compliance with modified 
terms. In order to give the public, including branches and agencies, 
more complete information on the level of and trends in asset quality 
at individual institutions, the agencies are proposing to eliminate the 
confidential treatment currently provided for this information 
beginning with the amounts reported as of June 30, 2001.
    Some financial institutions have held that information on loans, 
leases, and other assets that are past due 30 through 89 days is not a 
reliable indicator of future loan losses or of general asset

[[Page 22559]]

quality. They further note that market discipline will be reduced, 
rather than enhanced, by the release of information that is highly 
susceptible to misinterpretation to the extent that it could cause an 
unjustifiable loss of funding to the industry. However, banking 
supervisors have consistently found information on loans and leases 
past due 30 through 89 days to be helpful in identifying financial 
institutions with emerging asset quality problems. Therefore, the 
agencies believe that such information is a useful indicator of general 
asset quality and will not represent misleading information to the 
public.
    Currently the agencies publicly disclose information reported by 
insured commercial banks, FDIC-supervised savings banks, and bank 
holding companies on loans and leases that are past due 90 days or more 
and still accruing, in nonaccrual status, or restructured and in 
compliance with modified terms. The agencies will publicly disclose 
reported information on loans and leases that are past due 30 through 
89 days and still accruing for these institutions effective as of June 
30, 2001. However, for periods prior to June 30, 2001, such past due 
data will not be publicly disclosed on an individual institution basis. 
Disclosing the information reported on Schedule N of the FFIEC 002 will 
also provide for a consistent reporting treatment with other U.S. 
banking institutions.

Request for Comment

    Comments submitted in response to this Notice will be shared among 
the agencies and will be summarized or included in the Board's request 
for OMB approval. All comments will become a matter of public record. 
Written comments should address the accuracy of the burden estimates 
and ways to minimize burden as well as other relevant aspects of the 
information collection requests. Comments are invited on:
    (a) Whether the proposed collection of information is necessary for 
the proper performance of the agencies' functions, including whether 
the information has practical utility;
    (b) The accuracy of the agencies' estimate of the burden of the 
information collection, including the validity of the methodology and 
assumptions used;
    (c) Ways to enhance the quality, utility, and clarity of the 
information to be collected;
    (d) Ways to minimize the burden of the information collection on 
respondents, including through the use of automated collection 
techniques or other forms of information technology; and
    (e) Estimates of capital or start up costs and costs of operation, 
maintenance, and purchase of services to provide information.

    Board of Governors of the Federal Reserve System, April 30, 
2001.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 01-11164 Filed 5-3-01; 8:45 am]
BILLING CODE 6210-01-P