[Federal Register Volume 69, Number 158 (Tuesday, August 17, 2004)]
[Notices]
[Pages 51145-51150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18751]


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DEPARTMENT OF THE TREASURY

Office of the Comptroller of the Currency

FEDERAL RESERVE SYSTEM

FEDERAL DEPOSIT INSURANCE CORPORATION


Agency Information Collection Activities: Proposed Collection; 
Comment Request

AGENCIES: Office of the Comptroller of the Currency (OCC), Treasury; 
Board of Governors of the Federal Reserve System (Board); and Federal 
Deposit Insurance Corporation (FDIC).

ACTION: Joint notice and request for comment.

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SUMMARY: In accordance with the requirements of the Paperwork Reduction 
Act of 1995 (44 U.S.C. chapter 35), the OCC, the Board, and the FDIC 
(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 Federal Financial Institutions Examination Council 
(FFIEC), of which the agencies are members, has approved the agencies' 
publication for public comment of a proposal to revise the Country 
Exposure Report (FFIEC 009) and the Country Exposure Information Report 
(FFIEC 009a), which are currently approved information collections. At 
the end of the comment period, the comments and recommendations 
received will be analyzed to determine the extent to which the FFIEC 
should modify the reports. The agencies will then submit the reports to 
OMB for review and approval.

DATES: Comments must be submitted on or before October 18, 2004.

ADDRESSES: Interested parties are invited to submit written comments to 
any or all of the agencies. All comments, which should refer to the OMB 
control number, will be shared among the agencies.
    OCC: Comments should be sent to the Public Information Room, Office 
of the Comptroller of the Currency, Mailstop 1-5, Attention: 1557-0100, 
250 E Street, SW., Washington, DC 20219. Due to delays in the OCC's 
mail service since September 11, 2001, commenters are encouraged to 
submit comments by fax or e-mail. Comments may be sent by fax to (202) 
874-4448, or by e-mail to [email protected]. You can inspect 
and photocopy the comments at the OCC's Public Information Room, 250 E 
Street, SW., Washington, DC 20219. You can make an appointment to 
inspect the comments by calling (202) 874-5043.
    Board: You may submit comments, identified by FFIEC 009, by any of 
the following methods:
     Agency Web Site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments on the http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: [email protected]. Include docket 
number in the subject line of the message.
     Fax: (202) 452-3819 or (202) 452-3102.
     Mail: Jennifer J. Johnson, Secretary, Board of Governors 
of the Federal Reserve System, 20th Street and Constitution Avenue, 
NW., Washington, DC 20551.
    All public comments are available from the Board's Web site at 
http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as 
submitted, except as necessary for technical reasons. Accordingly, your 
comments will not be edited to remove any identifying or contact 
information. Public comments may also be viewed electronically or in 
paper in Room MP-500 of the Board's Martin Building (20th and C 
Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.
    FDIC: Written comments should identify ``Information Collection 
3064-0017, FFIEC 009'' as the subject and be submitted by any of the 
following methods:
     Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html.
     E-mail: Comments @FDIC.gov.
     Mail: Robert E. Feldman, Executive Secretary, Attention: 
Comments, FDIC, 550 17th Street, NW., Washington, DC 20429.
     Hand Delivery/Courier: Guard station at the rear of the 
550 17th Street Building (located on F Street) on business days between 
7 a.m. and 5 p.m.
    Comments may be inspected and photocopied in the FDIC Public 
Information Center, Room 100, 801 17th Street, NW., Washington, DC, 
between 9 a.m. and 4:30 p.m. on business days.
    A copy of the comments may also be submitted to the OMB desk 
officer for the agencies: Mark Menchik, Office of Information and 
Regulatory Affairs, Office of Management and Budget, New Executive 
Office Building, Room 10235, Washington, DC 20503 or electronic mail to 
[email protected].

FOR FURTHER INFORMATION CONTACT: Additional information or a copy of 
the collection may be requested from:
    OCC: John Ference, Acting OCC Clearance Officer, or Camille Dixon, 
(202) 874-5090, Legislative and Regulatory Activities Division, Office 
of the Comptroller of the Currency, 250 E Street, SW., Washington, DC 
20219.
    Board: Cindy Ayouch, 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 call 
(202) 263-4869, Board of Governors of the Federal Reserve System, 20th 
and C Streets, NW., Washington, DC 20551.
    FDIC: Leneta G. Gregorie, Counsel, (202) 898-3719, Legal Division, 
Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, 
DC 20429.

[[Page 51146]]


SUPPLEMENTARY INFORMATION: Proposal to revise the following currently 
approved collections of information:
    Report Title: Country Exposure Report and Country Exposure 
Information Report.
    Form Number: FFIEC 009 and FFIEC 009a.
    Frequency of Response: Quarterly.
    Affected Public: Business or other for profit.

OCC:

    OMB Number: 1557-0100.
    Estimated Number of Respondents: 21 (FFIEC 009), 21 (FFIEC 009a).
    Estimated Average Time per Response: 30 burden hours (FFIEC 009), 
5.25 burden hours (FFIEC 009a).
    Estimated Total Annual Burden: 2,520 burden hours (FFIEC 009), 441 
burden hours (FFIEC 009a).

Board:

    OMB Number: 7100-0035.
    Estimated Number of Respondents: 31 (FFIEC 009), 16 (FFIEC 009a).
    Estimated Average Time per Response: 30 burden hours (FFIEC 009), 
5.25 burden hours (FFIEC 009a).
    Estimated Total Annual Burden: 3,720 burden hours (FFIEC 009), 336 
burden hours (FFIEC 009a).

FDIC:

    OMB Number: 3064-0017.
    Estimated Number of Respondents: 22 (FFIEC 009), 22 (FFIEC 009a).
    Estimated Average Time per Response: 30 burden hours (FFIEC 009), 
5.25 burden hours (FFIEC 009a).
    Estimated Total Annual Burden: 2,640 burden hours (FFIEC 009), 462 
burden hours (FFIEC 009a).

General Description of Reports

    These information collections are mandatory: 12 U.S.C. 161 and 1817 
(national banks), 12 U.S.C. 248(a), 1844(c), and 3906 (State member 
banks and bank holding companies); and 12 U.S.C. 1817 and 1820 (insured 
State nonmember commercial and savings banks). The FFIEC 009 
information collection is given confidential treatment (5 U.S.C. 
552(b)(4) and (b)(8)). The FFIEC 009a information collection is not 
given confidential treatment.

Abstract

    The Country Exposure Report (FFIEC 009) is filed quarterly with the 
agencies and provides information on international claims of U.S. banks 
and bank holding companies that is used for supervisory and analytical 
purposes. The information is used to monitor country exposure of banks 
to determine the degree of risk in their portfolios and the possible 
impact on U.S. banks of adverse developments in particular countries. 
The Country Exposure Information Report (FFIEC 009a) is a supplement to 
the FFIEC 009 and provides publicly available information on material 
foreign country exposures (all exposures to a country in excess of 1 
percent of total assets or 20 percent of capital, whichever is less) of 
U.S. banks and bank holding companies that file the FFIEC 009 report. 
As part of the Country Exposure Information Report, reporting 
institutions must also furnish a list of countries in which they have 
lending exposures above 0.75 percent of total assets or 15 percent of 
total capital, whichever is less.

Current Action

    The agencies propose to revise the FFIEC 009 in order to harmonize 
U.S. data with data on cross-border exposures collected by other 
countries and disseminated by the Bank for International Settlements 
(BIS) as their ``consolidated banking statistics.'' The proposed 
revisions should also provide additional information about U.S. banks' 
exposure to country risk, transfer risk, and foreign-exchange risk. The 
proposed revisions would collect additional detail on foreign-office 
claims of U.S. banks on local residents, including sector breakdowns 
and a currency split; a split between commitments and guarantees plus 
credit derivatives; and trade finance after adjustments for collateral 
and guarantees. Under the proposal, the definition of the public (i.e., 
government) sector would be brought into agreement with the definition 
used in the Consolidated Reports of Condition and Income (Call Report) 
(forms FFIEC 031 and FFIEC 041) that banks file quarterly. No changes 
to the FFIEC 009a are proposed, although the change in the definition 
of the public sector on the FFIEC 009 would change the amounts reported 
in Columns 6 and 7 of the FFIEC 009a by corresponding amounts. The 
instructions to the FFIEC 009a reporting form would need to be changed, 
however, to reflect column changes on the FFIEC 009. In addition, 
comments are requested on the way claims are adjusted for collateral 
and guarantees.
    In proposing these revisions, the FFIEC has attempted to be mindful 
of the fact that some of the revisions may increase reporting burden 
for reporters. In light of this, the FFIEC has looked for areas in 
which reporting burden might be reduced. As a consequence, the proposed 
revisions drop a number of items from the report. For example, 
reporters are no longer asked to report: Total cross-border claims on 
an immediate-counterparty basis, the maturity of claims in the one-to-
five-year and over-five-year categories, risk redistribution of claims 
on the public sector separately from the non-bank private sector, 
commitments on an immediate-counterparty basis, and risk 
redistributions for commitments.
    The agencies propose to implement changes to the FFIEC 009 
effective with the March 2005 report date.

International Harmonization

    As noted above, one of the reasons for requesting changes to the 
FFIEC 009 is to increase the degree of harmonization between U.S. data 
and data collected by other countries' central banks. Together, these 
data make up the BIS consolidated banking statistics, which are 
compiled by the BIS from data submitted by the G-10 \1\ central banks 
and a number of other developed and developing country central banks. 
Beginning as of December 2004, the BIS will implement enhancements to 
these statistics. The enhancements will provide users with more data on 
an ``ultimate-risk'' basis--i.e., after adjusting for collateral and 
third-party guarantees--including details on local claims and 
commitments and guarantees. Most of the participating central banks, 
including all of the G-10 central banks, agreed to collect the new 
data, and also to harmonize their existing data more closely with BIS 
guidelines. Therefore, some of the proposed revisions are intended to 
collect the new data that the BIS will begin compiling and other 
revisions are intended to bring U.S. data into agreement with the 
current BIS guidelines. As a result, when the enhanced statistics are 
implemented, they will reflect a significant harmonization of country 
exposure data across countries.
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    \1\ The Group of Ten is made up of eleven industrial countries 
(Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, 
Sweden, Switzerland, the United Kingdom and the United States) which 
consult and cooperate on economic, monetary and financial matters.
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    As a general rule, it is desirable for the United States to comply 
with international data collection efforts, especially when doing so 
does not cause undue burden on U.S. reporting institutions. The cost of 
complying with the new statistics will be considerably less for U.S. 
reporters than for reporters in many countries, because most of the 
data needed for the enhancements to the BIS statistics was already 
collected on the FFIEC 009, whereas many countries must collect a large 
amount of new data. U.S. compliance helps create international data 
that are comparable

[[Page 51147]]

across countries and are, therefore, more useful. If the United States 
were not to collect these additional data, it would be the only large 
country not in almost full compliance with the new statistics.

Proposed Revisions to the FFIEC 009 Reporting Form

Schedule 1: Country Exposure Report (Excluding Foreign Exchange and 
Derivative Products)
    1. Redefine columns 1, 2, and 3. ``Cross-Border Claims'' by 
``Banks'' (column 1), ``Public'' (column 2), and ``Other'' (column 3) 
would include ``Foreign-Office Claims on Local Residents in Non-Local 
Currency'' and would exclude local claims in the domestic currency 
subject to a risk reallocation. This change would improve, in a way 
that adds the least number of columns to the reporting form, 
harmonization of international data by bringing U.S. data into 
agreement with the BIS guidelines for the consolidated banking 
statistics. This change does not alter, nor does it reflect a change 
in, the definitions of country, cross-border, or transfer risks. Cross-
border claims on an immediate-counterparty basis would be calculated as 
the sum of these columns less the proposed column 5. (See ``5. Add a 
column.'' below.)
    2. Delete column 4. ``Cross-Border Claims: Total'' (column 4) would 
be deleted in order to lower reporting burden. Total cross-border 
claims on an ultimate-risk basis are considerably more useful than 
immediate-counterparty data for assessing banks' exposure to country 
risk and can be calculated from the proposed reporting form.
    3. Redefine and renumber column 5. ``Cross-Border Claims: Estimated 
Breakdown of Column (4) by Time Remaining to Maturity: One Year and 
Under'' (column 5) would include ``Foreign-Office Claims on Local 
Residents in Non-Local Currency.'' This change would improve, in a way 
that adds the least number of columns to the reporting form, 
harmonization of international data by bringing U.S. data into 
agreement with the BIS guidelines for the consolidated banking 
statistics. This change does not alter, nor does it reflect a change 
in, the definitions of country, cross-border, or transfer risks. Column 
5 would be renumbered to column 4 on the proposed reporting form.
    4. Delete columns 6 and 7. ``Cross-Border Claims: Estimated 
Breakdown of Column (4) by Time Remaining to Maturity'' for ``Over One 
Year to Five Years'' (column 6) and ``Over Five Years'' (column 7) 
would be deleted in order to lower reporting burden. In addition, the 
distinction between the two maturity buckets is considered to be of 
marginal usefulness.
    5. Add a column. The proposed column, ``Immediate-Counterparty 
Basis: Foreign-Office Claims on Local Residents in Local Currency'' 
(column 5), would be added to increase harmonization of international 
data by bringing U.S. data into agreement with BIS guidelines.
    6. Rename and renumber column 8. ``Cross-Border Claims: Claims 
Reported in Columns 1-3 with Head Office/Guarantor Located in Another 
Country'' by ``Bank'' (column 8) would be renamed and renumbered 
``Redistribution of Claims To Adjust for Ultimate Risk: Outward Risk 
Transfers of Claims Reported in Columns 1, 2, 3 and 5 or on U.S. 
Residents'' by ``Claims on Banks'' (column 6) on the proposed reporting 
form.
    7. Combine columns 9 and 10. ``Cross-Border Claims: Claims Reported 
in Columns 1-3 with Head Office/Guarantor Located in Another Country'' 
by ``Public'' (column 9) and ``Other'' (column 10) would be combined 
into ``Redistribution of Claims To Adjust for Ultimate Risk: ``Outward 
Risk Transfers of Claims Reported in Columns 1, 2, 3 and 5 or on U.S. 
Residents'' by ``Claims on Non-Banks'' (column 7) on the proposed 
reporting form. Distinguishing between risk redistributions to the 
public and the non-bank private sectors is considered to be of marginal 
usefulness, so the proposed reporting form combines these columns in 
order to lower reporting burden.
    8. Rename and renumber column 11. ``Cross-Border Claims: 
Redistribution of Guaranteed Amounts Reported in Columns 8-10 to 
Country of Head Office/Guarantor'' by ``Bank'' (column 11) would be 
renamed and renumbered ``Redistribution of Claims To Adjust for 
Ultimate Risk: Inward Risk Transfers of Claims Reported in Columns 6 
and 7'' by ``Claims on Banks'' (column 8) on the proposed reporting 
form.
    9. Combine columns 12 and 13. ``Cross-Border Claims: Redistribution 
of Guaranteed Amounts Reported in Columns 8-10 to Country of Head 
Office/Guarantor'' by ``Public'' (column 12) and ``Other'' (column 13) 
would be combined into ``Redistribution of Claims to Adjust for 
Ultimate Risk: Inward Risk Transfers of Claims Reported in Columns 6 
and 7'' by ``Claims on Non-Banks'' (column 9) on the proposed reporting 
form. Distinguishing between risk redistributions to the public and the 
non-bank private sectors is considered to be of marginal usefulness, so 
the proposed reporting form combines these columns in order to lower 
reporting burden.
    10. Renumber column 14. ``Net Due to (or Due from) Own Related 
Offices in Other Countries'' (column 14) would become a Memorandum Item 
and be renumbered to column 21 on the proposed reporting form.
    11. Delete column 15. ``Commitments'' (column 15) would be deleted 
in order to lower reporting burden. Immediate-counterparty commitments 
and guarantees are considered to be less useful than the ultimate-risk 
data.
    12. Delete columns 16 and 17. ``Commitments in Column (15) Head 
Office/Guarantor in Another Country'' (column 16) and ``Redistribution 
of Commitments in Column (16) to Country of Head Office/Guarantor'' 
(column 17) would be deleted in order to lower reporting burden. The 
primary use for these columns was to compute commitments and guarantees 
on an ultimate-risk basis.
    13. Add three columns. The proposed columns, ``Ultimate-Risk Basis: 
Cross-Border Claims'' by ``Banks'' (column 10), ``Public'' (column 11), 
and ``Other'' (column 12), would be added to collect directly data that 
must be calculated from the current reporting form, but that would not 
be able to be calculated from the proposed reporting form. Using the 
current reporting form, cross-border claims on an ultimate-risk basis 
(i.e., after adjusting for guarantees and collateral) are calculated by 
adding the data in Columns 1, 2, 3, 11, 12, and 13 and subtracting the 
data in Columns 8, 9, and 10. These data are and will continue to be 
the one of the key numbers on the E.16 Statistical Release, Country 
Exposure Lending Survey, and are used for country risk analysis. The 
data will also continue to be the basis for the amounts reported on the 
FFIEC 009a. Other than the change in the definition of the public 
sector, there should be no difference between the amounts reported in 
these proposed columns and the amounts that would be calculated from 
the data on the current reporting form.
    14. Split column 18 into three columns. ``Local Country Claims on 
Local Residents'' (column 18) would be split into three columns, 
``Ultimate-Risk Basis: Foreign-Office Claims on Local Residents'' by 
``Banks'' (column 13), ``Public'' (column 14), and ``Other'' (column 
15), on the proposed reporting form. These columns would collect a 
breakdown of foreign-office claims on local residents by sector of the 
ultimate obligor. This breakdown would increase

[[Page 51148]]

harmonization of international data by bringing U.S. data into 
agreement with the BIS guidelines for the consolidated banking 
statistics. It would also improve the ability of U.S. data users to 
evaluate the exposures of foreign offices of U.S. banks to local 
residents.
    15. Add a column. The proposed column, ``Ultimate-Risk Basis: 
Foreign-Office Claims on Local Residents: Breakdown of Total of Columns 
13, 14, and 15: Claims in Non-Local Currency'' (column 16), would be 
added to improve the ability of U.S. data users to evaluate the 
exposures of foreign offices of U.S. banks to local residents.
    16. Add two columns. The proposed columns, ``Ultimate-Risk Basis: 
Cross-Border and Foreign-Office Commitments and Guarantees'' by 
``Commitments'' (column 17) and ``Guarantees and Credit Derivatives'' 
(column 18), would be added on the proposed reporting form. These 
proposed columns differ in two ways from commitments on an ultimate-
risk basis that are derived from columns 15, 16, and 17 on the current 
reporting form (by adding columns 15 and 17 and then subtracting column 
16). First, on the current reporting form, commitments are combined 
indistinguishably with guarantees (including credit derivatives); 
whereas on the proposed reporting form, commitments and guarantees 
(including credit derivatives) would each be reported separately. 
Second, the current reporting form collects only cross-border 
commitments and guarantees, whereas the proposed reporting form would 
collect cross-border commitments and guarantees plus foreign-office 
commitments to and guarantees on local residents. The proposed columns 
would increase harmonization of international data by bringing U.S. 
data into agreement with the BIS guidelines. In addition, the inclusion 
of foreign-office commitments to and guarantees on local residents 
would provide a more complete picture of the contingent exposures of 
U.S. banks to foreign residents. The breakout of commitments from 
commitments and guarantees (plus credit derivatives) would provide a 
more useful picture of the exposures of U.S. banks to foreign 
residents, because commitments have a different purpose and are likely 
to have a different risk profile than guarantees.
    17. Split column 19 into two columns. ``Local Country Liabilities'' 
(column 19) would be split into two columns, ``Foreign-Office 
Liabilities in Non-Local Currency'' (column 19) and ``Foreign-Office 
Liabilities in Local Currency'' (column 20), on the proposed reporting 
form. Foreign office liabilities represent legal obligations of a 
foreign office and for which no payment is guaranteed at locations 
outside of the country of the office. Collecting foreign-office 
liabilities in local currency achieves greater harmonization of 
international data, by bringing U.S. data into greater agreement with 
BIS guidelines. In addition, data on foreign-office liabilities in 
local currency, together with the information collected in proposed 
columns 13, 14, 15, and 16 from which one can derive foreign-office 
claims on local residents in local currency, gives data users 
information about the net exposures of foreign offices of U.S. banks to 
local residents in local currency. The total of the two proposed 
columns--total foreign-office liabilities--is needed in order to 
calculate net local claims that is currently reported in column 2 of 
the FFIEC 009a.
    18. Rename and renumber column 20. ``Amounts Reported in Column (4) 
After Adjustments in Columns (8-13) that Represent Assets Held for 
Trading'' (column 20) would be renamed and renumbered ``Amounts 
Reported in Columns 10, 11, and 12 that are Assets Held for Trading'' 
(column 22) on the proposed reporting form.
    19. Redefine and renumber column 21. ``Trade Financing Reported in 
Columns (4) and (15)'' (column 21) would change to ``Amounts Reported 
in Columns 10, 11, 12, 17, and 18 that are Trade Finance'' (column 23). 
The proposed column differs from what is currently collected because 
the data would be collected on an ultimate-risk basis rather than 
immediate-counterparty basis. On the current reporting form, trade 
financing is to be reported for claims reported in columns 1, 2, 3, 4, 
and 15--i.e., for cross-border claims and commitments (plus guarantees 
and credit derivatives) on an immediate-counterparty basis. On the 
proposed reporting form, it would be reported for cross-border claims 
and cross-border and foreign-office commitments and guarantees (plus 
credit derivatives) on an ultimate-risk basis. This change makes the 
reporting of trade finance more comparable with data on bank claims on 
an ultimate-risk basis.

Proposed Revisions to the FFIEC 009 Reporting Form

Schedule 2: Country Exposure Report--Foreign Exchange and Derivative 
Products
    There are no revisions of substance that are proposed for Schedule 
2. However, two changes are proposed for the language used in Schedule 
2.
    1. Replace ``Revaluation Gains'' and ``Revaluation Losses'' with 
``Positive Fair Values'' and ``Negative Fair Values.'' These changes 
are made for clarity, and are not intended to change the amounts 
reported on the form.
    2. Rename columns 6 and 7. ``Local Country Claims on Local 
Residents'' (column 6) would be renamed ``Foreign Office Claims on 
Local Residents'' and ``Local Country Liabilities'' (column 7) would be 
renamed ``Foreign Office Liabilities.'' The new terminology is more 
descriptive of what is being collected. No change is proposed to the 
definition of what is to be reported.

Proposed Revisions to the FFIEC 009 Instructions--Schedule 1

    1. Change instructions so that claims are reported in columns 1, 2, 
3, and 5 on only an immediate-counterparty basis--i.e., according to 
the country of residence and sector of the borrower. The current FFIEC 
009 instructions state that columns 1 through 7 should include, in 
addition to cross-border claims, ``foreign office local and non-local 
currency claims on local residents that are guaranteed by residents of 
other countries,'' which are reported according to the country of 
residence of the guarantor, and that in Columns 1, 2, and 3, ``if the 
credit is guaranteed by another sector in the same country, report the 
amount in the sector to which the respondent looks for the ultimate 
source of repayment.'' The proposed reporting form drops these 
instructions, and by doing so, would produce a more accurate measure of 
claims on an immediate-counterparty basis. This change would increase 
the harmonization of international data by bringing U.S. data into 
agreement with the BIS guidelines for the consolidated banking 
statistics.
    2. Redefine public sector to conform to that used in the Call 
Reports. The definition of the public sector (used for columns 2, 9, 
and 12) in the current FFIEC 009 instructions is broader than the 
definition used in the Call Report instructions. The revised 
instructions would change the definition to conform to that used in the 
Call Report. Specifically, claims on government-owned commercial firms, 
which are defined as claims on the public sector under the current 
instructions, would not be considered to be claims on the public sector 
under the proposed revisions. This change, by achieving consistency of 
definitions with the Call Report, should reduce reporting burden. In 
addition, this change increases harmonization of international data, 
because this is the same definition recommended in the BIS guidelines.

[[Page 51149]]

The definition has the added advantage of logical consistency, because 
it treats government-owned commercial firms in the same manner as 
government-owned banks, which are excluded from the public sector under 
the current instructions. The ``other'' sector category (column 3, 10, 
and 13) is a residual category. Thus, changing the definition of the 
public sector would result in a change in the amounts reported in the 
``other'' sector columns as well. The definition of the banking sector 
would not change.
    Reporting institutions should note that the redefinition of the 
public sector, described above in the context of Schedule 1, would also 
affect the reporting of claims on the public sector in Schedule 2.
    3. Change instructions to measure more accurately the 
redistribution of claims to adjust for ultimate risk (Columns 8 through 
13). Columns 8 through 13 on the current reporting form reflect the 
redistribution of only cross-border claims, whereas the redistribution 
of foreign-office claims on local residents is included 
indistinguishably with cross-border claims. Under the proposed 
revisions, these columns would include the redistribution of cross-
border claims and foreign-office claims on local residents. In 
addition, under the proposed revisions, within-country, inter-sectoral 
risk transfers should be reported, whereas the current instructions 
state that claims that are guaranteed by a resident of the same country 
as the borrower should be reported according to the sector of the 
guarantor, rather than that of the borrower. Together, these changes 
mean that these columns would fully reflect risk redistributions, 
thereby increasing the transparency of data reported by U.S. banks. The 
changes would also increase harmonization of international data by 
bringing U.S. data into agreement with the BIS guidelines for the 
consolidated banking statistics.

Proposed Revisions to the FFIEC 009 Instructions--Schedule 2

    1. Change instructions so that exposures from derivative contracts 
are reported for all derivative contracts, not just for derivative 
contracts held for trading. The current instructions ask that 
revaluation gains on, i.e., positive fair values of, derivative 
contracts be reported for only those contracts held for trading. This 
change would improve the ability of U.S. data users to assess the 
exposures of U.S. banks to foreign residents.

Comments

    The FFIEC would like to solicit comments on the following issues 
related to the FFIEC 009, Schedule 1.
    1. Request comment on whether the instructions for risk 
redistributions should be changed with regard to the treatment of 
resale agreements. In the proposed instructions (as in the current 
instructions), resale agreements are treated as collateralized claims--
i.e., a claim on the counterparty that is collateralized by the asset 
that is to be resold. The proposed instructions for risk transfers in 
the presence of collateral are:
    Collateral is treated as a ``guarantee'' of a claim if the 
collateral is: (a) Tangible, liquid, and readily-realizable and (b) is 
both held and realizable outside of the country of residence of the 
borrower. Collateral can include investment grade debt instruments and 
regularly traded shares of stocks. In cases involving collateral other 
than stocks and debt securities, the sector and country of the 
``guaranteeing'' party is the sector and country of residence of the 
institution holding the collateral. If the collateral is stocks or debt 
securities, the sector and country of the ``guaranteeing'' party is the 
sector and country of residence of the party issuing the security.
    If the collateral consists of a basket of convertible currencies or 
investment grade securities of different countries, the exposure may be 
reported on the ``Other'' line (for example, ``other Latin America'') 
that most closely represents the geographical composition of the 
basket.
    Comments are invited as to whether these proposed instructions 
should be modified such that a risk transfer is reported for resale 
agreements only if the country of the collateral (the asset to be 
resold) has a better risk rating than that of the immediate-
counterparty.
    2. Request comment on whether the instructions for risk 
redistributions should be changed with regard to the treatment of 
repayment structures that may mitigate transfer risk. Specifically, a 
bank may be able to structure a credit in a manner in which the primary 
source of repayment is not subject to transfer or country risks. 
Examples include transactions with local subsidiaries of multinationals 
that are structured to capture the cash flow from trade transactions 
outside of the country of the immediate-counterparty. Comments are 
invited on possible changes to the instructions to account for such 
issues, the analytical justification for making such changes, and the 
ability of reporters to comply with such instructions.
    3. Request comment on the desirability of adding a column to 
collect foreign-office liabilities by country of residence of the 
creditor, which would be reported by only those institutions that meet 
the criteria to file the Quarterly Report of Assets and Liabilities of 
Large Foreign Offices of U.S. Banks (FR 2502q). Currently, thirty-eight 
institutions that file the FFIEC 009 also file 153 separate FR 2502q 
reports, one for each country of their foreign branches and each 
country of their foreign subsidiaries. On the FR 2502q, they report 
liabilities (and assets) by country of residence of the creditor (and 
borrower). This information is extremely useful to the Board and the 
U.S. Treasury Department when the U.S. government needs to review the 
magnitude of claims of foreign residents on U.S. banks, particularly at 
times of international crisis. If this additional column was added to 
the FFIEC 009, then the FR 2502q could be scaled back to collect data 
from foreign offices located only in off-shore financial centers. This 
would reduce the number of FR 2502q reports that would need to be filed 
by FFIEC 009 reporters from 153 to 56, reducing reporting burden, on 
net, for these reporters. Reporting burden for FFIEC 009 reporters that 
do not currently report the FR 2502q would not change, because they 
would be exempted from reporting this column.
    The FFIEC would like to solicit comments on the following issue 
related to the FFIEC 009, Schedule 2.
    4. Request comment on possible reporting of potential future credit 
exposures of derivative contracts. Specifically, comments are requested 
on the usefulness of data on potential future credit exposures of 
derivative contracts on a credit equivalency basis (following the U.S. 
risk-based capital standards), and the burden of reporting such data.

Request for Comment

    Comments are invited on:
    a. Whether the information collections are necessary for the proper 
performance of the agencies' functions, including whether the 
information has practical utility;
    b. The accuracy of the agencies' estimates of the burden of the 
information collections, 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 information collections on 
respondents,

[[Page 51150]]

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.
    Comments submitted in response to this notice will be shared among 
the agencies. All comments will become a matter of public record. 
Written comments should address the accuracy of the burden estimates 
and ways to minimize burden including the use of automated collection 
techniques or the use of other forms of information technology as well 
as other relevant aspects of the information collection request.

    Dated: August 5, 2004.

Stuart Feldstein,
Assistant Director, Legislative and Regulatory Activities Division, 
Office of the Comptroller of the Currency.
    Board of Governors of the Federal Reserve System, August 11, 
2004.
Jennifer J. Johnson,
Secretary of the Board.
    Dated at Washington, DC, this 6th day of August, 2004.

Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
[FR Doc. 04-18751 Filed 8-16-04; 8:45 am]
BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P