[Federal Register Volume 80, Number 102 (Thursday, May 28, 2015)]
[Notices]
[Pages 30459-30461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12738]


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FEDERAL RESERVE SYSTEM


Proposed Agency Information Collection Activities; Comment 
Request

AGENCY: Board of Governors of the Federal Reserve System.

SUMMARY: On June 15, 1984, the Office of Management and Budget (OMB) 
delegated to the Board of Governors of the Federal Reserve System 
(Board) its approval authority under the Paperwork Reduction Act (PRA), 
to approve of and assign OMB control numbers to collection of 
information requests and requirements conducted or sponsored by the 
Board. Board-approved collections of information are incorporated into 
the official OMB inventory of currently approved collections of 
information. Copies of the PRA Submission, 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.

DATES: Comments must be submitted on or before July 27, 2015.

ADDRESSES: You may submit comments, identified by FR 4199, by any of 
the following methods:
     Agency Web site: http://www.federalreserve.gov. Follow the 
instructions for submitting comments at http://www.federalreserve.gov/apps/foia/proposedregs.aspx.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Email: [email protected]. Include OMB

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number in the subject line of the message.
     FAX: (202) 452-3819 or (202) 452-3102.
     Mail: Robert deV. Frierson, 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/apps/foia/proposedregs.aspx as submitted, 
unless modified 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 form in Room 
3515, 1801 K Street (between 18th and 19th Streets NW.) Washington, DC 
20006 between 9:00 a.m. and 5:00 p.m. on weekdays.
    Additionally, commenters may send a copy of their comments to the 
OMB Desk Officer--Shagufta Ahmed--Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 10235 725 17th Street NW., Washington, DC 20503 or by 
fax to (202) 395-6974.

FOR FURTHER INFORMATION CONTACT: A copy of the PRA OMB submission, 
including the proposed reporting form and instructions, supporting 
statement, and other documentation will be placed into OMB's public 
docket files, once approved. These documents will also be made 
available on the Federal Reserve Board's public Web site at: http://www.federalreserve.gov/apps/reportforms/review.aspx or may be requested 
from the agency clearance officer, whose name appears below.
    Federal Reserve Board Acting Clearance Officer--Mark Tokarski--
Office of the Chief Data Officer, Board of Governors of the Federal 
Reserve System, Washington, DC 20551 (202) 452-3829. Telecommunications 
Device for the Deaf (TDD) users may contact (202) 263-4869, Board of 
Governors of the Federal Reserve System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION: 

Request for Comment on Information Collection Proposal

    The following information collection, which is being handled under 
this delegated authority, has received initial Board approval and is 
hereby published for comment. At the end of the comment period, the 
proposed information collection, along with an analysis of comments and 
recommendations received, will be submitted to the Board for final 
approval under OMB delegated authority. Comments are invited on the 
following:
    a. Whether the proposed collection of information is necessary for 
the proper performance of the Federal Reserve's functions; including 
whether the information has practical utility;
    b. The accuracy of the Federal Reserve's estimate of the burden of 
the proposed 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 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.

Proposal To Approve Under OMB Delegated Authority the Extension for 
Three Years, Without Revision, of the Following Report

    Report title: Basel II Interagency Pillar 2 Supervisory Guidance.
    Agency form number: FR 4199.
    OMB control number: 7100-0320.
    Frequency: Annual.
    Reporters: State member banks, bank holding companies (BHCs).
    Estimated annual reporting hours: 5,460.
    Estimated average hours per response: 420.
    Number of respondents: 13.
    General description of report: The Board's Legal Division has 
determined that the FR 4199 is authorized by section 9(6) of the 
Federal Reserve Act and section 5 of the Bank Holding Company Act. 
Section 9(6) of the Federal Reserve Act requires state member banks to 
``comply with the reserve and capital requirements of this chapter'' 
and to make reports of condition ``in such form'' and ``contain[ing] 
such information'' as the Board may require (12 U.S.C. 324). Section 5 
of the Bank Holding Company Act authorizes the Board to ``issue 
regulations and orders relating to the capital requirement for bank 
holding companies'' and requires BHCs to ``keep the Board informed as 
to [their] financial condition, systems for monitoring and controlling 
financial and operating risks . . .'' (12 U.S.C. 1844 (b) & (c)). 
Because the recordkeeping requirements are contained within guidance 
(and not a statute or regulation), they are voluntary. Because the FR 
4199 recordkeeping requirements require that banks and BHCs retain 
their own records, the Freedom of Information Act (FOIA) would only be 
implicated if the Federal Reserve's examiners retained a copy of the 
records as part of an examination or supervision of a bank or BHC. 
However, records obtained as a part of an examination or supervision of 
a bank or BHC are exempt from disclosure under FOIA exemption (b)(8), 
for examination material (5 U.S.C. 552(b)(8)). In addition, the records 
may also be exempt under (b)(4), which exempts from disclosure ``trade 
secrets and commercial or financial information obtained from a person 
and privileged or confidential,'' and under (b)(6) for non-public 
personal information regarding owners, shareholders, directors, 
officers or employees if the disclosure would ``constitute a clearly 
unwarranted invasion of personal privacy'' (5 U.S.C. 552(b)(4) and 
(b)(6)).
    Abstract: The advanced approaches framework requires certain banks 
and BHCs to use an internal ratings-based approach to calculate 
regulatory credit risk capital requirements and advance measurement 
approaches to calculate regulatory operational risk capital 
requirements, and to meet the higher of the minimum requirements under 
the general risk-based capital rules and the minimum requirements under 
the advanced approaches framework.
    A bank is required to comply with the advanced approaches framework 
if it meets either of two independent threshold criteria: (1) 
Consolidated total assets of $250 billion or more, as reported on the 
most recent year-end regulatory reports; or (2) consolidated total on-
balance sheet foreign exposure of $10 billion or more at the most 
recent year-end.
    A BHC is required to comply with the advanced approaches framework 
if the BHC has (1) consolidated total assets (excluding assets held by 
an insurance underwriting subsidiary) of $250 billion or more, as 
reported on the most recent year-end regulatory reports; (2) 
consolidated total on-balance sheet foreign exposure of $10 billion or 
more at the most recent year-end; or (3) a subsidiary depository 
institution (DI) that is meets the criteria to be subject to the 
advanced approaches rule, or elects to adopt the advanced approaches. 
As of September 30, 2014, 13 BHCs meet the above criteria and are 
therefore subject to the advanced approaches rule.\1\
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    \1\ Regulation YY permits a bank holding company that is a 
subsidiary of a foreign banking organization to elect not to comply 
with the advanced approaches rule prior to formation of an IHC with 
the prior approval of the Board. 12 CFR 252.153(e)(2)(C).
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    Also, some banks or BHCs may voluntarily decide to adopt the 
advanced approaches framework. Both

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mandatory and voluntary respondents are required to meet certain 
qualification requirements before they can use the advanced approaches 
framework for risk-based capital purposes.
    The Pillar 2 Guidance sets the expectation that respondents 
maintain certain documentation as described in paragraphs 37, 41, 43, 
and 46 of this portion of the guidance. Details of the expectations for 
each section are provided below.

Setting and Assessing Capital Adequacy Goals That Relate to Risk

    Paragraph 37. In analyzing capital adequacy, a banking organization 
should evaluate the capacity of its capital to absorb losses. Because 
various definitions of capital are used within the banking industry, 
each banking organization should state clearly the definition of 
capital used in any aspect of its internal capital adequacy assessment 
process (ICAAP).\2\ Since components of capital are not necessarily 
alike and have varying capacities to absorb losses, a banking 
organization should be able to demonstrate the relationship between its 
internal capital definition and its assessment of capital adequacy. If 
a banking organization's definition of capital differs from the 
regulatory definition, the banking organization should reconcile such 
differences and provide an analysis to support the inclusion of any 
capital instruments that are not recognized under the regulatory 
definition. Although common equity is generally the predominant 
component of a banking organization's capital structure, a banking 
organization may be able to support the inclusion of other capital 
instruments in its internal definition of capital if it can demonstrate 
a similar capacity to absorb losses. The banking organization should 
document any changes in its internal definition of capital, and the 
reason for those changes.
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    \2\ A bank holding company with total consolidated assets of $50 
billion or more is required to develop and maintain a capital plan, 
which must set forth a capital adequacy process. 76 FR 74631 
(December 1, 2011). ICAAP would constitute an internal capital 
adequacy process for purposes of the final rule, and bank holding 
companies that have a satisfactory ICAAP generally would be 
considered to have a satisfactory internal capital adequacy process 
for purposes of the final rule.
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Ensuring Integrity of Internal Capital Adequacy Assessments

    Paragraph 41. A banking organization should maintain thorough 
documentation of its ICAAP to ensure transparency. At a minimum, this 
should include a description of the banking organization's overall 
capital-management process, including the committees and individuals 
responsible for the ICAAP; the frequency and distribution of ICAAP-
related reporting; and the procedures for the periodic evaluation of 
the appropriateness and adequacy of the ICAAP. In addition, where 
applicable, ICAAP documentation should demonstrate the banking 
organization's sound use of quantitative methods (including model 
selection and limitations) and data-selection techniques, as well as 
appropriate maintenance, controls, and validation. A banking 
organization should document and explain the role of third-party and 
vendor products, services and information--including methodologies, 
model inputs, systems, data, and ratings--and the extent to which they 
are used within the ICAAP. A banking organization should have a process 
to regularly evaluate the performance of third-party and vendor 
products, services and information. As part of the ICAAP documentation, 
a banking organization should document the assumptions, methods, data, 
information, and judgment used in its quantitative and qualitative 
approaches.
    Paragraph 43. The board of directors and senior management have 
certain responsibilities in developing, implementing, and overseeing 
the ICAAP. The board should approve the ICAAP and its components. The 
board or its appropriately delegated agent should review the ICAAP and 
its components on a regular basis, and approve any revisions. That 
review should encompass the effectiveness of the ICAAP, the 
appropriateness of risk tolerance levels and capital planning, and the 
strength of control infrastructures. Senior management should 
continually ensure that the ICAAP is functioning effectively and as 
intended, under a formal review policy that is explicit and well 
documented. Additionally, a banking organization's internal audit 
function should play a key role in reviewing the controls and 
governance surrounding the ICAAP on an ongoing basis.
    Paragraph 46. As part of the ICAAP, the board or its delegated 
agent, as well as appropriate senior management, should periodically 
review the resulting assessment of overall capital adequacy. This 
review, which should occur at least annually, should include an 
analysis of how measures of internal capital adequacy compare with 
other capital measures (such as regulatory, accounting-based or market-
determined). Upon completion of this review, the board or its delegated 
agent should determine that, consistent with safety and soundness, the 
banking organization's capital takes into account all material risks 
and is appropriate for its risk profile. However, in the event a 
capital deficiency is uncovered (that is, if capital is not consistent 
with the banking organization's risk profile or risk tolerance) 
management should consult and adhere to formal procedures to correct 
the capital deficiency.

    Board of Governors of the Federal Reserve System, May 21, 2015.
Robert deV. Frierson,
Secretary of the Board.
[FR Doc. 2015-12738 Filed 5-27-15; 8:45 am]
 BILLING CODE 6210-01-P