[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
[[Page 82358]]
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
[[Page 82359]]
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