[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
[[Page 56958]]
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,
[[Page 56959]]
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
[[Page 56960]]
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