96-28357. Agency information collection activities: Proposed collection; Comment request  

  • [Federal Register Volume 61, Number 215 (Tuesday, November 5, 1996)]
    [Notices]
    [Pages 56957-56960]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-28357]
    
    
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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.
    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
    
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    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. Proposed 
    revisions to the following currently approved collections of 
    information have received approval from the Federal Financial 
    Institutions Examination Council (FFIEC), of which the Agencies are 
    members, and are hereby published for comment by the Board 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 proposed revisions should be modified prior to the Board's 
    submission of them to OMB for review and approval. Comments are invited 
    on: (a) whether the proposed revisions to the following 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' estimate of the burden of the information 
    collections as they are proposed to be revised, including the validity 
    of the methodology and assumptions used; (c) ways to enhance the 
    quality, utility, and clarity of the information to be collected; and 
    (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.
    DATES: Comments must be submitted on or before January 6, 1997.
    ADDRESSES: Interested parties are invited to submit written comments to 
    the agency listed below. All comments should refer to the OMB control 
    number.
        Written comments should be addressed to Mr. William W. Wiles, 
    Secretary, Board of Governors of the Federal Reserve System, 20th and C 
    Streets, N.W., Washington, D.C. 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, N.W. 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 261.8 of the Board's Rules Regarding Availability 
    of Information, 12 CFR 261.8(a).
        A copy of the comments may also be submitted to the OMB desk 
    officer for the Agencies: Alexander Hunt, Office of Information and 
    Regulatory Affairs, Office of Management and Budget, New Executive 
    Office Building, Room 3208, Washington, D.C. 20503.
    FOR FURTHER INFORMATION CONTACT: A copy of the proposed revisions to 
    the collections of information may be requested from the agency 
    clearance officers whose name appears below.
        Mary M. McLaughlin, Board Clearance Officer, (202) 452-3829, 
    Division of Research and Statistics, Board of Governors of the Federal 
    Reserve System, 20th and C Streets, N.W., Washington, D.C. 20551. For 
    Telecommunications Device for the Deaf (TDD) users only, Dorothea 
    Thompson, (202) 452-3544, Board of Governors of the Federal Reserve 
    System, 20th and C Streets, N.W., Washington, D.C. 20551.
    SUPPLEMENTARY INFORMATION:
        Proposal to revise the following currently approved collection of 
    information:
    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.
    Number of Respondents: 513
    Total Annual Responses: 2,052
    Estimated Time per Response: 22.75 burden hours.
    Total Annual Burden: 46,683 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 purposes. The report is collected and processed by the Federal 
    Reserve 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, 1997, report date. Nonetheless, as 
    is customary for FFIEC 002 reporting changes, U.S. branches are advised 
    that, for the March 31, 1997, report date, reasonable estimates may be 
    provided for any new or revised item for which the requested 
    information is not readily available.
        The proposed revisions are summarized as follows:
        Deletions and Reductions in Detail. Based on their review of the 
    current content of the FFIEC 002, the Agencies propose that the 
    following deletions and reductions in detail be made to the FFIEC 002 
    report, generally because the existing items or current levels of 
    detail are no longer considered sufficiently useful to warrant their 
    continued collection.
        (1) Schedule E - Deposit Liabilities and Credit Balances: Memoranda 
    item 1.a, ``Time certificates of deposit of $100,000 or more'' would be 
    combined with existing Memoranda item 1.b, ``Other time deposits of 
    $100,000 or more.''
        (2) Schedule C, Part I - Loans and Leases: Memoranda item 1, 
    ``Holdings of commercial paper included in Schedule C, part I'' would 
    be deleted. In addition, the instructions would be revised to indicate 
    that commercial paper should no longer be reported as a loan in 
    Schedule C, but should be reported as a security in Schedule RAL-Assets 
    and Liabilities, normally in item 1.c.(2), ``Other bonds, notes, 
    debentures, and corporate stock (including state and local securities): 
    All other.''
        Modification of Instructions That Differ From GAAP and Related New 
    Items. In November 1995, the FFIEC announced that it had approved the 
    adoption of generally accepted accounting principles (GAAP) as the 
    reporting basis for the commercial bank Reports of Condition and Income 
    (Call Report), effective with the March 1997 report date. In addition, 
    GAAP should be used as the reporting basis for the FFIEC 002, although 
    differences between the U.S. branch's accounting basis and GAAP that 
    are not significant would be permitted. If the differences are 
    significant, then GAAP should be used in all such cases. Adopting GAAP 
    as the reporting basis in the basic schedules of the FFIEC 002 report 
    will eliminate existing differences between U.S. branch regulatory 
    reporting standards and GAAP, thereby producing greater consistency in 
    the information collected in regulatory reports and general purpose 
    financial statements and reducing reporting burden. Although FFIEC 002 
    instructions that depart from GAAP will be eliminated,
    
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    the instructions will continue to contain and the FFIEC and the 
    Agencies will continue when necessary to issue specific reporting 
    guidance that falls within the range of acceptable practice under GAAP. 
    Each agency also will retain existing authority to require an 
    institution to report a transaction on the FFIEC 002 in accordance with 
    that agency's interpretation of GAAP.
        In connection with this move to GAAP, the section of the FFIEC 002 
    report's General Instructions on ``Applicability of Generally Accepted 
    Accounting Principles to Regulatory Reporting Requirements'' would be 
    revised. In addition, changes would be made to the following FFIEC 002 
    instructions to bring them into conformity with GAAP:
        (1) The treatment of assets sold with recourse in the Glossary 
    entry for ``Sales of Assets'' and the section of the Glossary entry for 
    ``Participations in Pools of Residential Mortgages'' on ``Privately-
    issued certificates of participation in pools of residential 
    mortgages''
        (2) The treatment of futures, forward, and option contracts in the 
    Glossary entry for ``Futures, Forward, and Standby Contracts''
        (3) The general prohibition on the netting of assets and 
    liabilities in the FFIEC 002 report set forth in the General 
    Instructions
        (4) The initial valuation of foreclosed assets in the instructions 
    to Schedule M, Part IV, item 2, ``Other real estate owned''
        (5) The treatment of repurchase agreements to maturity and long-
    term repurchase agreements in the Glossary entry for ``Repurchase/
    Resale Agreements''
        (6) The treatment of reciprocal balances in the instructions to 
    Schedule A, item 3, ``Balances due from depository institutions in the 
    U.S.'' and in the Glossary entry for ``Reciprocal Balances''
        (7) The treatment of securities transactions with settlement 
    periods exceeding regular way settlement time limits that have been 
    reported as forward contracts according to the instructions to Schedule 
    L, item 9, ``Gross amounts (for example, notional amounts) of off-
    balance sheet derivatives''
        U.S. branches that have engaged in any of the preceding types of 
    transactions or activities prior to January 1, 1997, and have reported 
    them in the FFIEC 002 report in accordance with the existing 
    instructions that differ from GAAP would be permitted to report them in 
    accordance with GAAP beginning in 1997. The effect of this retroactive 
    application of GAAP on the amount of a U.S. branch's net due from or 
    net due to related depository institutions as of January 1, 1997, (that 
    is, the amount of the ``catch-up'' adjustment) would be included in 
    Schedule RAL, item 2.a or item 5.a, and Schedule M, Part I, item 2.a.
        For some of the preceding types of transactions or activities which 
    will be affected by the modification of FFIEC 002 instructions that 
    differ from GAAP, the potential change in the reporting of these 
    transactions and activities is of concern to the Agencies. In some 
    cases, the instructional changes may affect the reported amount of a 
    U.S. branch's deposits and, if the U.S. branch is insured, its 
    assessment base for deposit insurance purposes. In order to identify 
    the extent of U.S. branch involvement in these areas or the effect on 
    reported deposits, the Agencies propose to add certain new items to the 
    FFIEC 002 report and to modify a number of existing reporting items, as 
    follows:
        (1) A new memoranda item would be added to Schedule RAL-- Assets 
    and Liabilities (or another schedule if more appropriate) for the 
    ``Amount of assets netted against liabilities to nonrelated parties 
    (excluding deposits in insured branches) on the balance sheet (Schedule 
    RAL) in accordance with generally accepted accounting principles.'' 
    This item would include securities purchased under agreements to resell 
    that have been netted against securities sold under agreements to 
    repurchase under Financial Accounting Standards Board (FASB) 
    Interpretation No. 41, back-to-back loans involving deposits (excluding 
    deposits in insured branches), receivables and payables arising from 
    unsettled trades, in-substance defeasance transactions grandfathered 
    under FASB Statement No. 125, and any other assets netted against 
    liabilities to nonrelated parties (excluding deposits in insured 
    branches) under FASB Interpretation No. 39. However, the item would 
    exclude netted on-balance sheet amounts associated with off-balance 
    sheet derivative contracts and assets netted in accounting for 
    pensions.
        (2) For insured U.S. branches, new items would be added to Schedule 
    O--Other Data for Deposit Insurance Assessments for the ``Amount of 
    assets netted against deposit liabilities of the branch (excluding IBF) 
    on the balance sheet (Schedule RAL) in accordance with generally 
    accepted accounting principles.'' Amounts would be reported separately 
    for assets netted against demand deposits and assets netted against 
    time and savings deposits. These items would exclude data on net 
    reciprocal demand balances and related adjustments reported in Schedule 
    O, Memoranda item 4.
        As indicated above, the existing FFIEC 002 instructions on 
    reciprocal balances will be revised to conform with GAAP. At present, 
    the instructions require U.S. branches to report reciprocal demand 
    balances with commercial banks in the U.S. (including U.S. branches and 
    agencies of other foreign banks) on a net basis on the balance sheet 
    (Schedule RAL) and in the deposit schedule (Schedule E). All other 
    reciprocal deposit relationships are to be reported gross. Because this 
    netting instruction differs from the reciprocal deposit netting 
    provisions in Section 7(a)(4) of the Federal Deposit Insurance Act, the 
    insurance assessments schedule contains three netting-related items 
    used to adjust reported deposits so they conform with the statute 
    (Schedule O, Memoranda items 4.a through 4.c). The FFIEC 002 
    instructions on reciprocal balances, once they are revised in 
    accordance with GAAP, will still differ from Section 7(a)(4), but in a 
    different manner than at present. Thus, items 4.a through 4.c of 
    Schedule O must be modified to ensure that insured U.S. branch 
    assessment bases continue to be properly measured. As revised, items 
    4.a through 4.c would be as follows:
        (a) ``Amount by which demand deposits would be reduced if the 
    reporting branch's reciprocal demand balances with the domestic offices 
    of U.S. banks and savings associations (and insured branches in Puerto 
    Rico and U.S. territories and possessions) that were reported on a 
    gross basis in Schedule E had been reported on a net basis''
        (b) ``Amount by which demand deposits would be increased if the 
    reporting branch's reciprocal demand balances with foreign banks and 
    foreign offices of U.S. banks (other than insured branches in Puerto 
    Rico and U.S. territories and possessions) that were reported on a net 
    basis in Schedule E had been reported on a gross basis''
        (c) ``Amount by which demand deposits would be reduced if cash 
    items in process of collection were included in the calculation of the 
    reporting branch's net reciprocal demand balances with the domestic 
    offices of U.S. banks and savings associations (and insured branches in 
    Puerto Rico and U.S. territories and possessions) in Schedule E''
        Credit Derivatives. Credit derivatives are off-balance sheet 
    arrangements that allow one party, the beneficiary, to transfer the 
    credit risk of a ``reference asset'' to another party, the guarantor. 
    The market for this new type of
    
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    instrument is expected to grow significantly over the next few years. 
    In order to identify the extent of U.S. branches' involvement with 
    these instruments, both on an individual institution basis and for the 
    industry, the Agencies propose to add two new items to Schedule L, Off-
    Balance Sheet Items and to Schedule M, Part V, Off-Balance Sheet Items 
    with Related Depository Institutions. The first item would be for the 
    notional amount of all credit derivatives on which the reporting U.S. 
    branch is the guarantor. The second would be for the notional amount of 
    all credit derivatives on which the reporting U.S. branch is the 
    beneficiary. U.S. branches would include the notional amounts of credit 
    default swaps, total rate of return swaps, and other credit derivative 
    instruments.
        Other New Items. Two new memoranda items would be added to Schedule 
    RAL - Assets and Liabilities, to itemize and describe significant 
    amounts included in items 1.h., ``Other assets including other claims 
    on nonrelated parties,'' and 4.f., ``Other liabilities to nonrelated 
    parties.'' The reporting branch or agency would itemize and describe 
    any amounts included in Schedule RAL item 1.h. that exceed 25 percent 
    of that item whenever the balance reported for item 1.h. exceeds 5 
    percent of total assets. Similarly, the reporting branch or agency 
    would itemize and describe any amounts included in Schedule RAL item 
    4.f. that exceed 25 percent of that item whenever the balance reported 
    for item 4.f. exceeds 5 percent of total liabilities.
        Another new memoranda item would be added to Schedule RAL to report 
    the number of full-time equivalent employees at each U.S. branch. This 
    information will serve as one measure of the adequacy of controls of 
    U.S. branches in managing their operations, particularly in the area of 
    trading activities.
        Other Instructional Changes. In addition to those previously 
    mentioned, the following changes, which may affect how some U.S. 
    branches report certain information on the FFIEC 002 report, would be 
    made to the instructions.
        (1) Reporting of when-issued securities--The instructions for the 
    reporting of forward contracts in Schedule L, Off-Balance Sheet Items, 
    and Schedule M, Part V, Off-Balance Sheet Items with Related Depository 
    Institutions, will be modified to reflect ``gross commitments to 
    purchase'' and ``gross commitments to sell'' when-issued securities as 
    off-balance sheet derivative contracts.
        (2) Firm commitments to sell residential mortgage loans--The 
    instructions to Schedule L, item 9.b, column A, ``Interest rate 
    forwards,'' direct U.S. branches to report forward contracts committing 
    the U.S. branch to purchase or sell financial instruments and whose 
    predominant risk characteristic is interest rate risk. Questions have 
    been raised about whether firm commitments to sell loans secured by 1-
    to-4 family residential properties should be reported as interest rate 
    forwards. The Agencies believe that commitments that have a specific 
    interest rate, delivery date, and dollar amount should be considered 
    forward contracts and plan to revise this item instruction accordingly.
        Request for Comment. Comments submitted in response to this Notice 
    will be summarized or included in the Agencies' requests 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 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.
        Board of Governors of the Federal Reserve System, October 30, 
    1996.
    William W. Wiles,
    Secretary of the Board.
    [FR Doc. 96-28357 Filed 11-4-96; 8:45AM]
    Billing Code 6210-01-F
    
    
    

Document Information

Published:
11/05/1996
Department:
Federal Reserve System
Entry Type:
Notice
Action:
Notice and request for comment.
Document Number:
96-28357
Dates:
Comments must be submitted on or before January 6, 1997.
Pages:
56957-56960 (4 pages)
PDF File:
96-28357.pdf