[Federal Register Volume 67, Number 236 (Monday, December 9, 2002)]
[Notices]
[Pages 72953-72956]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30971]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Announcement of Board 
Approval Under Delegated Authority and Submission to OMB

SUMMARY: 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 CFR 
1320.16 (OMB Regulations on Controlling Paperwork Burdens on the 
Public). Board-approved collections of information are incorporated 
into the official OMB inventory of currently approved collections of 
information. Copies of the OMB 83-I's and supporting statements and 
approved collection of information instruments are placed into OMB's 
public docket files. 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--Cindy Ayouch--Division of Research and Statistics, Board of 
Governors of the Federal Reserve System, Washington, DC 20551 (202-452-
3829); OMB Desk Officer--Joseph Lackey--Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503.

SUPPLEMENTARY INFORMATION:

Final Approval Under OMB Delegated Authority of the Extension For Three 
Years, With Revision, of the Following Reports:

    1. Report title: Reports of Foreign Banking Organizations
    Agency form numbers: FR Y-7, FR Y-7N, FR Y-7NS, and FR Y-7Q
    OMB control number: 7100-0125
    Frequency: Quarterly and annually
    Reporters: Foreign banking organizations (FBO's)
    Annual reporting hours: 5,330 hours
    Estimated average hours per response:
    FR Y-7: 3.25 hours,
    FR Y-7N (quarterly): 6 hours,
    FR Y-7N (annual): 6 hours,
    FR Y-7NS: 1 hour,
    FR Y-7Q (annual): 1 hour,
    FR Y-7Q (quarterly): 1.25 hours
    Number of respondents:
    FR Y-7: 327,
    FR Y-7N (quarterly): 129,
    FR Y-7N (annual): 96,
    FR Y-7NS: 164,
    FR Y-7Q (annual): 301,
    FR Y-7Q (quarterly): 26
    Small businesses are affected.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec. 601-604a, 611-631, 1844(c), 3106, and 
3108(a)). Confidential treatment is not routinely given to the data in 
these reports. However, the FR Y-7Q data will be held confidential 
until 120 days after the as-of date. Also, confidential treatment for 
information, in whole or in part, on any of the reporting forms can be 
requested in accordance with the instructions to the form, pursuant to 
sections (b)(4) and (b)(6) of the Freedom of Information Act [5 U.S.C. 
Sec. Sec. 522(b)(4) and (b)(6)].
    Abstract: The FR Y-7 is an annual report filed by all FBO's that 
engage in banking in the United States, either directly or indirectly, 
to update their financial and organizational information. The Federal 
Reserve uses information to assess an FBO'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.
    Current actions: On August 19, 2002, the Federal Reserve published 
a notice soliciting comments for 60 days on proposed revisions to the 
FR Y-7, Reports of Foreign Banking Organizations (67 FR 53797). The 
notice described the Federal Reserve proposal to (1) streamline the 
existing nonbank subsidiary reporting framework for all non-
functionally regulated nonbank subsidiaries, (2) add a new report for 
collecting capital and asset information from FBO's (FR Y-7Q), and (3) 
revise the Annual Report of FBO's, FR Y-7, to update the reporting form 
for recent changes to Regulation K and delete items that were no longer 
needed. The Federal Reserve Board has approved the proposed changes, 
with the modifications discussed below, effective for the December 31, 
2002, as-of date.
    The Board received comment letters from three FBO's and three trade 
groups representing FBO's on this proposal. Most commenters supported 
the Board's efforts to streamline the reports and reduce reporting 
burden. Other substantive comments addressed the reporting dates and 
timing of submissions, the implementation date, and confidentiality for 
all the reports; consolidation and thresholds for the nonbank reports 
(FR Y-7N and 7NS); and top-tier reporting for capital and asset 
information and reporting of total assets (FR Y-7Q).
    Reporting dates and timing of submissions
    On the FR Y-7Q, FBO's that are financial holding companies (FHC's) 
must report capital and asset information quarterly and all other FBO's 
must report this information annually. Several commenters pointed out 
that some FHC FBO's do not provide quarterly capital and asset 
information even to their home country supervisors, and requested that 
capital information be collected on a basis consistent with home 
country reporting. Quarterly reporting will assist Federal Reserve 
supervisors in their evaluation of foreign bank FHC capital under the 
comparability requirements in the Gramm-Leach-Bliley Act. Also, 
quarterly reporting is appropriate for consistency with the reporting 
frequency for U.S. banking organizations. Therefore, the Federal 
Reserve maintains that quarterly reporting for FHC FBO's is 
appropriate. A commenter also suggested that FBO's be allowed to 
provide this information according to their fiscal year. As stated in 
the initial proposal, FBO's may report these data according to their 
fiscal year, but will provide these data on a calendar-year basis and 
note the as-of date on the form.
    A commenter requested that more time be given for submitting the FR 
Y-7Q, regardless of frequency. Since many FBO's do not produce capital 
and asset information for their home country supervisors or the public 
as quickly as 60 days after the as-of date, the Federal Reserve will 
allow all FR Y-7Q reporters to submit their data up to 90 days after 
the as-of date. Some commenters also noted that the Federal Reserve 
proposed in 2000 to require risk-based capital data within 90 days, yet 
decided to keep the 120-day deadline. At that time, the Federal Reserve 
recognized that 120 days were sometimes needed to compile the different 
kinds of information required for the FR Y-7. Because such information 
is now being collected in separate forms, the timetables for filing 
have been tailored more appropriately to the types of information 
sought.
    Some commenters expressed concern about the opportunity for 
extensions to file the FR Y-7Q. Cases in which home country practices 
do not allow for

[[Page 72954]]

reporting within 90 days might justify an extension, but only after 
consultation with Federal Reserve staff. Given the changes to 
submission dates suggested above, few extensions are expected to be 
granted after the initial implementation period.
    The FR Y-7N collects data on FBO's nonbank subsidiaries not held 
through a U.S. holding company (formerly the NFIS report). A few 
commenters addressed the fact that some current NFIS reporters provide 
data on their U.S. nonbank subsidiaries according to the home country 
fiscal year, which is not on a calendar-year basis. Since these nonbank 
subsidiaries are separately capitalized entities operating within the 
United States, the Federal Reserve maintains that they should report on 
a calendar-year basis for consistency with other U.S. nonbank 
subsidiaries. Also, U.S. branches and agencies of FBO's (which are not 
separately capitalized entities) are currently required to report 
quarterly on a calendar-year basis.
    Some commenters on the FR Y-7N requested that the quarterly filing 
requirement for ``significant'' nonbank subsidiaries (i.e., those with 
sizeable asset or off-balance-sheet positions) be eliminated because of 
burden arising from quarterly reconciliation with parent financial 
statements. However, the quarterly reporting requirement for 
significant nonbank subsidiaries was developed specifically to improve 
supervisory assessment of significant nonbank subsidiaries, because 
these significant nonbank subsidiaries have greater potential than 
other subsidiaries to pose risks to the FBO's other U.S. operations or 
the parent organization. As noted above, most FBO's already provide 
quarterly data on their branches and agencies, which requires 
reconciliation with financial statements of the parent organization. 
Therefore, quarterly data for significant nonbank subsidiaries will be 
collected. Finally, a commenter suggested that the threshold for 
quarterly reporting be determined annually, not quarterly. The Federal 
Reserve decided to maintain the quarterly threshold assessment since 
this is consistent with the assessment method for other quarterly 
regulatory reports.
    Several commenters also requested that FR Y-7N filers be given more 
than 60 days after the as-of date to submit the report. The commenters 
also pointed out that the filing deadline for the FR Y-7, which 
contains consolidated financial statements remains at 120 days. The 
submission deadline for both annual and quarterly reporting on the FR 
Y-7N will be extended to 75 days for an implementation period to allow 
respondents time to alter their systems. However, by March 2004, the 
submission deadline will be scaled back to 60 days (consistent with FR 
Y-11 and FR 2314 reports). The Federal Reserve decided to retain the 
120-day submission deadline for consolidated financial statements on 
the FR Y-7, since information on that report is required from the 
entire consolidated entity, which may have subsidiaries in various 
countries. The FR Y-7N collects data for individual U.S. subsidiaries, 
which should be available more quickly.
    Implementation date
    Several commenters stated that implementation of the new reporting 
framework for the FR Y-7Q and the FR Y-7N starting with year-end 2002 
would be particularly difficult, especially given the submission 
deadlines in the original proposal. In order to facilitate the 
transition to the new reporting requirements for the FR Y-7Q and the FR 
Y-7N, respondents will be given 180 days to report year-end 2002 
data.\1\ In addition, the requirement for any quarterly reporting as of 
March 31, 2002, will be waived. This one-time delayed implementation 
should allow respondents time to adjust to the new framework. Quarterly 
reporting will commence June 30, 2003.
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    \1\ Note that respondents who file for a fiscal year-end of 
October 31, 2002 under the current NFIS reporting requirements will 
only have to file once, i.e., as of December 31, 2002.
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    Confidentiality
    Several commenters addressed the lack of automatic confidential 
treatment of capital and asset information on the FR Y-7Q. The FBO's 
were concerned about having capital and asset information available 
before their public financial statements were released. Therefore, all 
FR Y-7Q data will be held confidential for 120 days after the as-of 
date, since these data are usually provided to the public by FBO's 
before that time. The 120-day confidentiality period will not preclude 
applicants from requesting from the Board confidentiality beyond that 
period, in whole or in part, on a case-by-case basis, if justified by 
the respondent.
    There were also requests that confidential status be applied to FR 
Y-7N reports. However, FR Y-7N respondents will not automatically be 
accorded confidential treatment. This is consistent with the current 
treatment of other domestic nonbank reports. The Board may grant 
confidentiality treatment for the reporting information on the FR Y-7N, 
in whole or in part, on a case-by-case basis, if justified by the 
respondent.
    Consolidation (FR Y-7N and FR Y-7NS)
    Several commenters strongly suggested that consolidated reporting 
of nonbank subsidiaries still be allowed for the FR Y-7N and FR Y-7NS. 
Legal entity data allows supervisors to identify issues more 
efficiently and effectively, and consolidated data is not as useful 
because filers consolidate reports inconsistently. Therefore, the 
Federal Reserve maintains that these respondents must file on a legal 
entity basis. As discussed in the following paragraph, however, the 
exemption of small or less significant respondents should offset burden 
since a large number of previously consolidated entities may meet the 
exemption criteria.
    Threshold for nonbank reports (FR Y-7N and FR Y-7NS)
    The commenters correctly pointed out that the reporting threshold 
for the abbreviated FR Y-7NS was actually lowered in the proposal, from 
the existing threshold of $150 million in total assets for NFIS 
reporters to $100 million in total assets for proposed FR Y-7NS 
reporters. All else equal, this would create unintended additional 
burden for proposed FR Y-7NS reporters. Therefore, the proposed 
threshold for abbreviated reporting will be raised from the amount 
initially proposed ($100 million) to $250 million. In addition, there 
was a request to raise the threshold for nonbank subsidiaries that are 
exempt from reporting altogether. This threshold will be raised from 
the proposed $20 million in total assets to $50 million.
    Top-tier reporting for capital and asset information (FR Y-7Q)
    Several commenters expressed concern that for capital and asset 
reporting on the FR Y-7Q, some top-tier FBO's might have to file data 
for U.S. regulatory reports when they do not submit capital and asset 
data to their home country supervisor. Reporting requirements for 
capital and asset information placed on top-tier entities will 
generally mirror those of the home country supervisors. For 
clarification, the instructions will include examples of cases in which 
top-tier filers would be exempt. In those limited instances where home 
country reporting would not be required, filers should consult with the 
appropriate Federal Reserve Bank regarding specific reporting 
requirements for the top-tier entity.
    Total assets (FR Y-7Q)
    A trade group representing foreign banks requested that the item 
for total assets be removed or separately linked to the frequency with 
which the reporting bank reports its total assets to

[[Page 72955]]

its home country supervisor. The commenter stated that it would not be 
feasible for some banks to report this figure on a quarterly basis 
without significant changes to their internal financial reporting 
systems. Information on total assets is required as part of the FHC 
declaration and therefore ongoing periodic collection of this 
information is consistent with the regulatory framework. As noted 
above, requiring such information to be provided on a quarterly basis 
is consistent with the requirements imposed on U.S. banking 
organizations and helpful in monitoring comparability requirements. 
Therefore, this item will be collected.

2. Report title: Financial Statements of U.S. Nonbank Subsidiaries of 
U.S. Bank Holding Companies

    Agency form number: FR Y-11 and FR Y-11S (formerly FR Y-11Q and FR 
Y-11I)
    OMB control number: 7100-0244
    Frequency: Quarterly and annually
    Reporters: Bank holding companies (BHC's)
    Annual reporting hours: 22,134 hours
    Estimated average hours per response:
    FR Y-11 (quarterly): 6 hours,
    FR Y-11 (annual): 6 hours,
    FR Y-11S (annual): 1 hour
    Number of respondents:
    FR Y-11 (quarterly): 843,
    FR Y-11 (annual): 239,
    FR Y-11S (annual): 468
    Small businesses are affected.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec. 1844(b) and (c) and 12 CFR 225.5(b)). 
Confidential treatment is not routinely given to the data in these 
reports. However, confidential treatment for the reporting information, 
in whole or in part, can be requested in accordance with the 
instructions to the form, pursuant to sections (b)(4) and (b)(6) of the 
Freedom of Information Act [5 U.S.C. Sec. Sec. 522(b)(4) and (b)(6)].
    Abstract: The FR Y-11 reports collect information that helps 
supervisory staff determine the condition of bank holding companies 
(BHC) that are engaged in nonbanking activities and helps monitor the 
volume, nature, and condition of their nonbanking subsidiaries. 
Financial information on nonbank subsidiaries is essential for 
monitoring their potential impact on the BHC's condition. The report 
collects information on assets, income, equity capital, and off-
balance-sheet items.
    Current actions: On August 19, 2002, the Federal Reserve published 
a notice soliciting comments for 60 days on proposed revisions to the 
Financial Statements of U.S. Nonbank Subsidiaries of U.S. Bank Holding 
Companies, FR Y-11 series (67 FR 53797). The notice described the 
Federal Reserve proposal to streamline the existing reporting framework 
for all non-functionally-regulated\2\ nonbank subsidiaries. The revised 
framework would both provide essential information to supervise and 
regulate non-functionally-regulated subsidiaries and reduce the burden 
on the industry. The proposed revisions included:
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    \2\ As distinguished from the term ``functionally regulated'' 
nonbank subsidiaries, which are entities in which the primary 
regulator is an organization other than the Federal Reserve, namely 
the Securities and Exchange Commission, Commodity Futures Trading 
Commission, state insurance commissioners, or state securities 
departments. Provisions of the Gramm-Leach-Bliley Act direct that 
the Federal Reserve must first rely on reports and information 
provided by the primary regulator for functionally regulated 
subsidiaries.
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    1) Implementing a uniform and streamlined reporting form for all 
nonbank subsidiary filers;
    2) Reducing the burden by increasing or establishing consistent 
filing thresholds for all nonbank subsidiary filers;
    3) Establishing filing thresholds for reporters, consistent with 
risk-focused supervision, based on asset size and off-balance-sheet 
activity (absolute measures), plus operating revenues and equity 
capital (relative measures);
    4) Not allowing consolidation among filers; and
    5) Eliminating reporting for the smallest filers.
    The Federal Reserve Board has approved the proposed changes, with 
the modifications discussed below, effective for the December 31, 2002, 
as-of date. The Federal Reserve received comment letters from two 
banking organizations. Both commenters supported the Board's effort to 
streamline the reporting requirements, create more consistency among 
all nonbank subsidiary filers, and reduce burden.
    Both commenters suggested that the Board permit nonbank 
subsidiaries to file consolidated or combined reports for entities 
engaged in similar activities. Currently, the nonbank subsidiaries of 
U.S. BHC's (FR Y-11 respondents) are required to file on a legal entity 
basis. Legal entity data allows supervisors to identify issues more 
efficiently and effectively, and consolidated data is not as useful 
because filers consolidate reports inconsistently. Therefore, the 
Federal Reserve maintains that these respondents must file on a legal 
entity basis. However, the initially proposed thresholds will be raised 
to reduce burden. Specifically, the threshold for abbreviated reporting 
will be raised from $100 million in total assets to $250 million and 
the exemption level (i.e., below which no report is required) will be 
raised from $20 million to $50 million. This is consistent with the new 
FR Y-7NS thresholds discussed above.
    One commenter suggested that the FR Y-11 include a separate line 
item for federal funds sold. The Federal Reserve does not plan to 
collect a separate item for federal funds because the amount being 
reported was not substantial enough to warrant a separate item.
3. Report title: Financial Statements of Foreign Subsidiaries of U.S. 
Banking Organizations
    Agency form number: FR 2314 and FR 2314S (formerly FR 2314a, b, and 
c)
    OMB control number: 7100-0073
    Frequency: Quarterly and annually
    Reporters: Foreign subsidiaries of U.S. state member banks, bank 
holding companies, and Edge or agreement corporations
    Annual reporting hours: 4,006 hours
    Estimated average hours per response:
    FR Y-2314 (quarterly): 6 hours,
    FR Y-2314 (annual): 6 hours,
    FR Y-2314S (annual): 1 hour
    Number of respondents:
    FR Y-2314 (quarterly): 123,
    FR Y-2314 (annual): 128,
    FR Y-2314S (annual): 537
    Small businesses are not affected.
    General description of report: This information collection is 
mandatory (12 U.S.C. Sec. Sec. 324, 602, 625, and 1844). Confidential 
treatment is not routinely given to the data in these reports. However, 
confidential treatment for the reporting information, in whole or in 
part, can be requested in accordance with the instructions to the form, 
pursuant to sections (b)(4) and (b)(6) of the Freedom of Information 
Act [5 U.S.C. Sec. Sec. 522(b)(4) and (b)(6)].
    Abstract: The FR 2314 reports are collected from U.S. member banks, 
Edge and agreement corporations, and BHCs for their direct or indirect 
foreign subsidiaries. The FR 2314 reports collect information on 
assets, income, equity capital, and off-balance sheet items and the 
data are used to monitor the growth, profitability, and activities of 
these foreign companies.
    Current actions: On August 19, 2002, the Federal Reserve published 
a notice soliciting comments for 60 days on proposed revisions to the 
Financial Statements of Foreign Subsidiaries of U.S. Banking 
Organizations, FR 2314 reports (67 FR 53797). The notice described the 
Federal Reserve proposal to streamline the existing reporting framework 
for all non-functionally-regulated nonbank subsidiaries. The revised 
framework will both provide essential information to supervise and

[[Page 72956]]

regulate non-functionally-regulated subsidiaries and reduce the burden 
on the industry as discussed for the FR Y-11 reports above.
    The Federal Reserve Board has approved the proposed changes, with 
the modifications discussed below, effective for the December 31, 2002, 
as-of date. The Federal Reserve received comment letters from two 
banking organizations. Both commenters supported the Board's effort to 
streamline the reporting requirements, create more consistency among 
all nonbank subsidiary filers, and reduce burden. They also provided 
other substantive comments that addressed consolidation and 
confidentiality, as discussed below.
    Consolidation
    Both commenters suggested that the Board permit nonbank 
subsidiaries to file consolidated or combined reports for entities 
engaged in similar activities and or located in the same country. In a 
change from current FR 2314 reporting requirements, the Federal Reserve 
proposed that foreign nonbank subsidiaries of U.S. banking 
organizations (FR 2314 respondents) no longer be permitted to file 
consolidated reports.
    One commenter stated that precluding consolidation of FR 2314 
respondents would increase burden. The same commenter indicated that a 
significant portion of the burden associated with filing legal entity 
based reports is due to the adjustments to switch financial statements 
from the accounting principles of their local country to U.S. generally 
accepted accounting principles (GAAP). The commenter indicted that, 
under the current consolidated reporting framework, reports based on 
local country accounting principles could be first consolidated and 
then converted to U.S. GAAP.
    Legal entity data allows supervisors to identify issues more 
efficiently and effectively, and consolidated data is not as useful 
because filers consolidate reports inconsistently. Therefore, the 
Federal Reserve maintains that these respondents must file on a legal 
entity basis. To further reduce burden, FR 2314 respondents filing 
reports on a legal-entity basis will not be required to follow U.S. 
GAAP, as initially proposed. Respondents will be encouraged to follow 
U.S. GAAP but will continue to have the option to file reports based on 
local country accounting principles. Also, FR 2314 respondents that 
currently consolidate data will be permitted to report on a 
consolidated basis for December 2002 and March 2003 reporting periods 
to allow time to adjust their systems.
    In addition, the initially proposed thresholds will be raised to 
reduce burden. Specifically, the threshold for abbreviated reporting 
will be raised from $100 million in total assets to $250 million and 
the exemption level (i.e., below which no report is required) will be 
raised from $20 million in total assets to $50 million. This is 
consistent with the new FR Y-11S and FR Y-7NS thresholds discussed 
above.
    Confidentiality
    One commenter suggested that the FR 2314 reports remain 
confidential, citing that disclosure of this information would likely 
be harmful to the competitive position of the reporting entities. As 
initially proposed, the FR 2314 respondents will no longer be accorded 
confidential treatment. Eliminating confidential treatment for the FR 
2314 respondents is consistent with the goals of the Federal Reserve to 
increase public availability of regulatory reports, enhancing data 
transparency and market discipline. However, the Federal Reserve may 
grant confidential treatment, in whole or part, on a case-by case basis 
if requested and justified by the respondent.
    Other Comments
    One commenter suggested that the Federal Reserve allow electronic 
filing of the FR 2314. The Federal Reserve is investigating ways to 
allow the electronic submission of the FR 2314 at some point in the 
future and will notify respondents when this option becomes available.
    Board of Governors of the Federal Reserve System, December 3, 2002.

Jennifer J. Johnson
Secretary of the Board.
[FR Doc. 02-30971 Filed 12-6-02; 8:45 am]
BILLING CODE 6210-01-S