[Federal Register Volume 63, Number 223 (Thursday, November 19, 1998)]
[Notices]
[Pages 64258-64260]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30769]
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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
that has been extended, revised, or implemented on or after October 1,
1995, 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) and the extension, without revision, of the Report of Assets and
Liabilities of Non-U.S. Branches that are Managed or Controlled by a
U.S. Branch or Agency of a Foreign Bank (FFIEC 002s). Both reports are
currently approved collections of information. The Board is publishing
the proposed revisions and extension 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 and the extension 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 January 19, 1999.
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.
[[Page 64259]]
Written comments should be addressed to Jennifer J. Johnson,
Secretary, Board of Governors of the Federal Reserve System, 20th and C
Streets, NW, Washington, DC 20551, 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 copy of the proposed revisions and
extensions of the collections of information may be requested from the
Board's clearance officer whose name appears below.
Mary M. McLaughlin, Chief, Financial Reports Section, (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 and extend the following
currently approved collections of information:
1. 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: 506.
Estimated Total Annual Responses: 2,024.
Estimated Time per Response: 23.15 burden hours.
Estimated Total Annual Burden: 46,856 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 balance sheet 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 proposed revisions to the Report of Assets and
Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002)
that are the subject of this notice have been approved by the FFIEC for
implementation as of the March 31, 1999, report date. The proposed
revisions are summarized as follows:
High-Risk Mortgage Securities: The agencies are proposing to
eliminate the High-Risk Mortgage securities items on Schedule RAL. U.S.
branches report the fair value and amortized cost of ``High-risk
mortgage securities'' in Memorandum items 5 and 6, respectively. The
definition of high-risk mortgage securities was taken from the
Supervisory Policy Statement on Securities Activities, which the FFIEC
approved and the agencies adopted in December 1991, effective February
10, 1992 (57 FR 4029, February 3, 1992). In April 1998, the FFIEC and
the agencies rescinded this policy statement and approved in its place
a Supervisory Policy Statement on Investment Securities and End-User
Derivatives Activities, effective May 26, 1998 (63 FR 20191, April 23,
1998). In adopting the new policy statement, the agencies removed the
previous policy statement's specific constraints concerning investments
in high-risk mortgage securities, including its ``high risk'' tests.
The new policy provides broader guidance covering all investment
securities, including the establishment by each institution of
appropriate risk limits. Accordingly, the agencies are proposing to
eliminate the two memorandum items for high-risk mortgage securities.
Instructional Changes
Computer Software Costs--In March 1998, the American Institute of
Certified Public Accountants (AICPA) issued Statement of Position (SOP)
98-1, Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. SOP 98-1 provides guidance on whether costs
of internal-use software should be capitalized (and then amortized) or
expensed as incurred. Internal-use software has the following
characteristics:
(a) The software is acquired, internally developed, or modified
solely to meet the entity's internal needs, and
(b) During the software's development or modification, no
substantive plan exists or is being developed to market the software
externally. This SOP is effective for financial statements for fiscal
years beginning after December 15, 1998. The SOP encourages earlier
application in fiscal years for which annual financial statements have
not been issued. For FFIEC 002 purposes, U.S. branches must adopt this
SOP upon its effective date based on their fiscal year. Early
application is permitted in the FFIEC 002 in accordance with the
transition guidance in the SOP. The FFIEC 002 instructions will be
revised to conform with SOP 98-1, including a new Glossary entry on
computer software costs that summarizes SOP 98-1 and other relevant
accounting standards.
Unsuitable Investment Practices--As mentioned above, the FFIEC and
the agencies rescinded the Supervisory Policy Statement on Securities
Activities in April 1998 and approved in its place a Supervisory Policy
Statement on Investment Securities and End-User Derivatives Activities.
The new policy statement does not retain the section of the former
policy statement addressing the reporting of securities activities,
including a description of practices considered unsuitable when
conducted in an institution's investment portfolio. In their Federal
Register notice publishing the Supervisory Policy Statement on
Investment Securities and End-User Derivatives Activities (63 FR
20191), the agencies stated their intent to separately issue
supervisory guidance on the reporting of investment securities. The
agencies are proposing to add guidance on this reporting matter to the
Glossary section of the FFIEC 002 instructions. This approach will make
guidance more readily accessible to U.S. branches as they prepare the
FFIEC 002.
Re-Booking Charged-Off Loans--When a U.S. branch makes a full or
partial direct write-down of a loan or lease that is uncollectible, the
branch establishes a new cost basis for the asset. Some U.S. branches
may attempt to reverse the previous write-down and ``re-book'' the
charged-off loan or lease after concluding that the prospects for
[[Page 64260]]
recovering the charge-off have improved. Re-booking a charged-off loan
is not an acceptable practice under generally accepted accounting
principles and, therefore, is not acceptable for FFIEC 002 purposes.
The Glossary entry for ``Assets Classified Loss'' will be revised to
indicate that once a new cost basis has been established for a loan or
lease through a direct write-down of the asset, this cost basis may not
be ``written up'' at a later date.
Consolidation of Subsidiaries--Some U.S. branches have requested
that the FFIEC clarify whether subsidiaries of U.S. branches should be
consolidated in the FFIEC 002. Consistent with U.S. generally accepted
accounting principles (GAAP), subsidiaries that are controlled by a
U.S. branch should be consolidated in the FFIEC 002. Accordingly, the
general instructions will be revised to indicate that, consistent with
GAAP, a U.S. branch should consolidate all entities in which it
maintains a controlling financial ownership interest, e.g., a direct or
indirect ownership interest of more than 50 percent of an entity's
outstanding voting shares.
2. Report Title: Report of Assets and Liabilities of a Non-U.S.
Branch that is Managed or Controlled by a U.S. Branch or Agency of a
Foreign (Non-U.S.) Bank.
Form Number: FFIEC 002S.
OMB Number: 7100-0273.
Frequency of Response: Quarterly.
Affected Public: U.S. branches and agencies of foreign banks.
Estimated Number of Respondents: 130.
Estimated Total Annual Responses: 520.
Estimated Time per Response: 6 burden hours.
Estimated Total Annual Burden: 3,120 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) and is
given confidential treatment (5 U.S.C. 552(b)(8)).
Small businesses are not affected.
Abstract: On a quarterly basis, all U.S. branches and agencies of
foreign banks are required to file detailed schedules of their assets
and liabilities in the form FFIEC 002. The FFIEC 002S is a separate
supplement to the FFIEC 002 that collects information on assets and
liabilities of any non-U.S. branch that is ``managed or controlled'' by
a U.S. branch or agency of the foreign bank. Managed or controlled
means that a majority of the responsibility for business decisions,
including but not limited to decisions with regard to lending or asset
management or funding or liability management, or the responsibility
for recordkeeping in respect of assets or liabilities for that foreign
branch resides at the U.S. branch or agency. A separate FFIEC 002S must
be completed for each managed or controlled non-U.S. branch. The FFIEC
002S must be filed quarterly along with the U.S. branch's or agency's
FFIEC 002. The data are used:
(1) To monitor deposit and credit transactions of U.S. residents;
(2) For monitoring the impact of policy changes;
(3) For analyzing structural issues concerning foreign bank
activity in U.S. markets;
(4) For understanding flows of banking funds and indebtedness of
developing countries in connection with data collected by the
International Monetary Fund (IMF) and the Bank for International
Settlements (BIS) that are used in economic analysis; and (5) To
provide information to assist in the supervision of U.S. offices of
foreign banks, which often are managed jointly with these branches.
Current Actions: The proposal to extend for three years, without
revision, the Report of Assets and Liabilities of a Non-U.S. Branch
that is Managed or Controlled by a U.S. Branch or Agency of a Foreign
(Non-U.S.) Bank (FFIEC 002S) that is the subject of this notice has
been approved by the FFIEC.
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 revisions to the FFIEC 002 and the
extension of the FFIEC 002S collections of information 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 minimize the burden of information collections 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, November 10, 1998.
Jennifer J. Johnson,
Secretary of the Board.
[FR Doc. 98-30769 Filed 11-18-98; 8:45 am]
BILLING CODE 6210-01-P
