[Federal Register Volume 65, Number 250 (Thursday, December 28, 2000)]
[Notices]
[Pages 82356-82359]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-33206]


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FEDERAL RESERVE SYSTEM


Agency Information Collection Activities: Proposed Collection; 
Comment Request

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

ACTION: 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 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 Federal Financial Institutions Examination 
Council (FFIEC), of which the agencies are members, has approved for 
public comment proposed revisions to the Report of Assets and 
Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002). 
The Board is publishing the proposed revisions on behalf of the 
agencies. 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 proposed revisions prior to giving 
its final approval. The Board will then submit the revisions to OMB for 
review and approval.

DATES: Comments must be submitted on or before February 26, 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,

[[Page 82357]]

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 mail room 
between 8:45 a.m. and 5:15 p.m., and to the security control room 
outside of those hours. Both the mail room 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 proposed FFIEC 002 
reporting form may be obtained at the FFIEC's web site (www.ffiec.gov). 
A copy of the proposed 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 Diane Jenkins, (202) 452-3544, 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 propose to 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 proposed to 
the Reports of Condition and Income (Call Report) (proposed 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 proposed revisions to the FFIEC 002 summarized below have been 
approved for publication by the FFIEC. The agencies would implement 
these proposed changes, except for new information proposed on 
fiduciary and related services, as of the June 30, 2001, reporting 
date. Proposed new information on fiduciary and related services would 
be effective with the December 31, 2001, reporting date.

A. Specific Proposed 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,'' would 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,'' would 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 propose to redefine this item 
to collect average liabilities for the calendar quarter preceding the 
quarter ending on the report date. This redefinition would 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) would 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),'' would be 
deleted.
Schedule C--Loans
    The separate loan categories for ``Loans to depository 
institutions'' and ``Acceptances of other banks'' (items 2 and 5, 
respectively) would be combined.
Schedule E--Deposit Liabilities and Credit Balances
    1. The reporting of demand deposits by category of depositor in 
column B of

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the body of the deposits schedule would be eliminated, with branches 
and agencies reporting instead only the total amount of their demand 
deposits in this column. Branches and agencies would 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 would end.
    2. Item 6, ``Certified and official checks,'' would 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,'' would 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 
would 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 would 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,'' would 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 
would 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 would 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,'' would 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 would duplicate each 
other. The caption for Memorandum item 2.a would be revised to read 
``Fair value of amounts carried as assets.''

B. Proposed New Information

Securitization and Asset Sale Activities
    The agencies propose to 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 would comprehensively capture information 
related to securitization and asset sale activities.
    Under this proposal, branches and agencies involved in 
securitization and asset sale activities would report quarter-end data 
for seven loan and lease categories. These data would 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 would 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 would 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 would 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 proposed new schedule would collect a considerable 
amount of information on these securitization activities, most branches 
and agencies will not be affected by Schedule S 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 also propose to 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 propose to 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 would promote 
risk-focused supervision by enhancing the agencies' ability to assess 
credit exposures and asset concentrations.
Reporting of Trust Data
    The agencies propose to 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) would 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 
would be required to report

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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 would 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 proposed 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 proposed 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 would 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 would apply to this reporting requirement. The length of 
time that trust institutions would have for completing the Fiduciary 
Schedule would be reduced from 45 days to 30 days for most institutions 
and from 75 days to 30 days for institutions that file electronically. 
The proposed implementation of this Fiduciary Schedule and the 
modification of the submission deadline for this reporting requirement 
is consistent with the reporting treatment currently proposed 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 quality. 
They further note that market discipline would 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 
would 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 have proposed to 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 March 31, 2001. Disclosing the information reported on Schedule N of 
the FFIEC 002 would 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, December 22, 
2000.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 00-33206 Filed 12-27-00; 8:45 am]
BILLING CODE 6210-01-P