Agency Information Collection Activities: Submission for OMB Review; Comment Request

AGENCY:

Board of Governors of the Federal Reserve System (Board)

ACTION:

Notice of information collection to be submitted to OMB for review and approval under the Paperwork Reduction Act of 1995.

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 Board hereby gives notice that it plans to submit to the Office of Management and Budget (OMB) on behalf of the agencies a request for review of the information collection described below.

On December 5, 2003, the agencies, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), requested public comment for 60 days on the revision, without extension, of the currently approved information collection: the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (FFIEC 002). The comment period expired February 3, 2004.

DATES:

Comments must be submitted on or before March 29, 2004.

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, which should refer to the “Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks, 7100-0032,” should be mailed to Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, N.W., Washington, DC 20551. Please consider submitting your comments through the Board's web site at www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm ; by e-mail to regs.comments@federalreserve.gov; or by fax to the Office of the Secretary at 202/452-3819 or 202/452-3102. Rules proposed by the Board and other federal agencies may also be viewed and commented on at www.regulations.gov. All public comments are available from the Board's web site at www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, except as necessary for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (C and 20th Streets, N.W.) between 9:00 a.m. and 5:00 p.m. on weekdays.

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/forms002.htm ). A copy of the proposed revisions to the collection of information may also be requested from Cindy Ayouch, 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 call (202) 263-4869.

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: 295

Estimated Total Annual Responses: 1,180

Estimated Time per Response: 22.75 burden hours

Estimated Total Annual Burden: 26,845 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)).

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: In response to the December 5, 2003, notice (68 FR 68082), the agencies received one comment letter from a Federal Reserve district bank. The bank supported the proposed revisions and suggested some additional instructional clarifications with regard to repurchase agreements. These clarifications will be incorporated as appropriate.

The revisions to the FFIEC 002 have been approved by the FFIEC as originally proposed and are summarized below. The agencies will implement the changes as of the March 31, 2004, reporting date.

Schedule L-Derivatives and Off-Balance-Sheet Items

Modified Line Item 12, “Gross fair values of derivative contracts,” to remove the following requirement: “The following items should be completed by those branches or agencies with total assets of $100 million or more.” The exemption from reporting the fair values of derivative contracts for branches and agencies with less than dollar;100 million in assets originated when derivatives were considered off-balance sheet items and predates FASB Statement No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133), which took effect in 2001. FAS 133 requires all derivatives to be measured at fair value and reported on the balance sheet as assets or liabilities. Because branches and agencies with less than $100 million in assets that have derivatives now have to regularly determine their fair value for reporting purposes, they have the information necessary to disclose the fair value of their derivatives in Schedule L. Accordingly, the agencies are eliminating this disclosure exemption. The fair value data on derivatives will complement the data that branches and agencies with less than $100 million in assets currently report on the notional amount of their derivative contracts.

Schedule M-Due from/Due to Related Institutions in the U.S. and in Foreign Countries (CONFIDENTIAL)

1. Modified Line Item 12, “Gross fair values of derivative contracts,” to remove the following requirement: “The following items should be completed by those branches or agencies with total assets of dollar;100 million or more.” The rationale for the proposed change is similar to the justification above for the comparable change to Schedule L.

2. Added Memoranda items 1.a, “Gross positive fair value,” and 1.b, “Gross negative fair value” to Memorandum item 1, “Notional amount of all credit derivatives on which the reporting branch or agency is the guarantor.” The new items will provide a better measure of credit and market risk for credit derivatives entered into with related depository institutions, particularly for branches and agencies with large positions in such credit derivatives.

3. Added Memoranda items 2.a, “Gross positive fair value,” and 2.b, “Gross negative fair value” to Memorandum item 2, “Notional amount of all credit derivatives on which the reporting branch or agency is the beneficiary.” The rationale for the proposed change is the same as the justification above for adding items to Memorandum item 1.

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.