[Federal Register Volume 60, Number 237 (Monday, December 11, 1995)]
[Notices]
[Pages 63521-63526]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-30036]



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FEDERAL RESERVE SYSTEM


Agency Forms Under Review

Background

    Notice is hereby given of the final approval of proposed 
information collections by the Board of Governors of the Federal 
Reserve System (Board) under OMB delegated authority, as per 5 C.F.R. 
1320.9 (OMB Regulations on Controlling Paperwork Burdens on the 
Public). The Federal Reserve 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 OMB control number.
FOR FURTHER INFORMATION CONTACT:
Federal Reserve Board Clearance Officer--Mary M. McLaughlin--Division 
of Research and Statistics, Board of Governors of the Federal Reserve 
System, Washington, D.C. 20551 (202-452-3829)
OMB Desk Officer--Milo Sunderhauf--Office of Information and Regulatory 
Affairs, Office of Management and Budget, New Executive Office 
Building, Room 3208, Washington, D.C. 20503 (202-395-7340)
    Final approval under OMB delegated authority of the extension, with 
revisions, of the following reports:
    1. Report title: Annual Report of Foreign Banking Organizations; 
Foreign Banking Organization Structure Report on U.S. Banking and 
Nonbanking Activities; and Foreign Banking Organization Confidential 
Report of Operations
Agency form number: FR Y-7, FR Y-7A, and FR 2068
OMB Docket number: 7100-0125
Frequency: Annual
Reporters: Foreign banking organizations
Annual reporting hours: 13,243
Estimated average hours per response: 41
Number of respondents: 323
Small businesses are not affected.
    General description of report: This information collection is 
mandatory [12 U.S.C. Secs. 1844(c), 3106, and 3108(a)]. Upon request 
from a respondent, certain information in the FR Y-7 and FR Y-7A may be 
deemed confidential pursuant to sections b(4) and (b)(6) of the Freedom 
of Information Act [5 U.S.C. Sec. 552]. All information provided in the 
FR 2068 is confidential [5 U.S.C. Sec. 552(b)(8)] and is subject to 
special handling procedures [12 CFR Sec. 261.11(h)].
    These reports are required from all foreign banking organizations 
(FBOs) engaged in the business of banking in the United States. 
Respondents must report, on the FR Y-7, information on the structure of 
their activities in the United States as well as financial statements 
prepared in accordance with home country accounting practices, separate 
financial statements for U.S. nonbanking subsidiaries, an organization 
chart reflecting investments in U.S. companies and foreign companies 
that do business in the United States, disclosure of large 
shareholders, and a list of officers and directors.
    The FR 2068 requires FBOs to report revenues and expenses, loan 
losses, asset quality, hidden reserves not disclosed on the FR Y-7, an 
organization chart, and financial data on non-U.S. subsidiaries that 
the FBO controls. Respondents will continue to submit the FR 2068 
directly with the Federal Reserve Board.
    Abstract: On December 16, 1994, the Federal Reserve Board approved 
earlier versions of these proposals for public comment and published 
notice in the FR [Vol. 60, FR 1779, January 6, 1995]. The initial 
comment period (30 days) expired on February 5, 1995. In light of the 
extensive changes proposed, commenters requested three successive 30-
day extensions of the comment period in order to fully assess the 
effects of the changes. As a result of those extensions, the final 
comment period expired on May 31, 1995.
    There were six commenters, four trade groups and two FBOs. The 
nature of the comments varied. Some addressed burden, some concerned 
confidentiality, and some suggested improvements to the reporting forms 
and instructions. Comments regarding burden focused on the accuracy of 
the overall burden estimate and on specific proposed revisions that 
commenters believed would increase burden significantly.
    After considering the comments, the Federal Reserve Board has 
approved several modifications to the initial proposal.
Reporting Structure
FR Y-7
    All FBOs engaged in the business of banking in the United States 
file the FR Y-7 annually, as of the end of the reporter's fiscal year. 
323 FBOs file the FR Y-7: 55 foreign bank holding companies; 218 
foreign banks with commercial lending companies, Edge corporations, or 
U.S. branches and agencies; and 50 foreign parent companies. 
Respondents report information on the structure of their activities in 
the United States, as well as the following financial and managerial 
information: 

[[Page 63522]]

    (1) Financial statements prepared in accordance with home country 
accounting practices.
    (2) Separate financial statements for U.S. nonbanking subsidiaries.
    (3) An organization chart reflecting investments in U.S. companies 
and foreign companies that do business in the United States.
    (4) Disclosure of large shareholders of registered shares and 
disclosure of known large shareholders of bearer shares.
    (5) A list of officers and directors.
    (6) Information to determine continuing eligibility as a qualified 
foreign banking organization under sections 2(h) and 4(c)(9) of the 
Bank Holding Company Act.
FR 2068
    FBOs that have a significant presence in the United States also 
file the FR 2068 annually. Prior to the latest revisions, FBOs with 
small U.S. banking operations were eligible for a filing exemption. 
While those exemptions were in effect there were 292 respondents. 
Elimination of the exemption adds 31 respondents. The FR 2068 collects 
information that enables the Federal Reserve to carry out its 
responsibilities by assessing the impact of an FBO's worldwide 
operations on its U.S. banking business. Prior to the latest revisions, 
this report required disclosure of revenues and expenses as calculated 
in accordance with local accounting practices and an explanation or 
general description of those accounting practices. The report still 
requires disclosure of loan losses, asset quality, gains and losses on 
securities, and hidden reserves not disclosed in the FR Y-7. The format 
calls for beginning balances, additions, deductions, and ending 
balances. The report provides flexibility that enables an FBO to submit 
the information in a manner that will minimize burden. Respondents may 
request permission to report substitute information when the specific 
reporting requirements would result in undue burden or expense or when 
the information is unavailable in the requested format.
    The FR 2068 also collects financial data on non-U.S. subsidiaries. 
Financial statements are required on all majority-owned (more than 50 
percent), unconsolidated, material foreign subsidiaries. FBOs also must 
report financial data detailing the total assets, total stockholders' 
equity, and net income of all material foreign companies in which it 
owns between 25 percent and 50 percent of the shares or which it 
otherwise controls.
    The FR 2068 requires that reporters provide an organization chart 
that details all foreign companies that the FBO directly or indirectly 
owns, controls, or holds with power to vote 25 percent or more of any 
class of voting stock. This requirement is broader than the 
organization chart required by the FR Y-7 in that the latter is limited 
to all related U.S. companies and foreign companies that engage in 
business in the United States.
Changes Proposed Initially
FR Y-7
    Several revisions were initially proposed for the FR Y-7: adding 
the Nonbank Financial Information Summary (NFIS), financial statements 
for each of the FBO's U.S. nonbanking subsidiaries, replacing the free-
form financial statements currently submitted; adding a new schedule to 
collect information on risk-based capital; requiring submission of 
documentation explaining differences in accounting standards in the 
FBO's home country from U.S. accounting standards; requiring submission 
of a copy of Securities and Exchange Commission (SEC) Form 20-F for 
those respondents that report to the SEC; and replacing part of the FR 
Y-7 with a new report, the FR Y-7A, to collect information on the 
structure and activities of FBOs.
FR 2068
    Initial proposed revisions to the FR 2068 included eliminating the 
filing exemption for those FBOs with small U.S. operations; eliminating 
earnings information; filing with the appropriate Federal Reserve Bank 
rather than directly with the Board; and adding several items to 
collect information on past due loans to replace similar information 
previously submitted in a free format. For both the FR Y-7 and FR 2068 
it was proposed that the organization chart be expanded to include U.S. 
and non-U.S. companies owned by individuals who own 25 percent or more 
of the FBO.
Public Comments and Federal Reserve Board Recommendations. 
    After considering the comments, the Federal Reserve Board made 
several modifications to the initial proposed changes. Changes and 
comments are discussed below in detail.
FR Y-7
    Commenters addressed several matters regarding the FR Y-7, 
including confidentiality, accounting standards, the organization 
chart, bearer shareholdings, and the Nonbank Financial Information 
Summary (NFIS.) There were no comments on the proposed new schedule for 
risk-based capital.
    Confidentiality procedures. Several commenters asked for advance 
guarantee of confidentiality for the FR Y-7. If this request were to be 
granted, commenters stated that certain affiliates may be more willing 
to disclose information. Other commenters suggested that, although they 
had no expectation that a request for confidential treatment would be 
denied, the Board's existing procedure places them in an awkward 
position when seeking information from affiliates. They also asked that 
confidentiality be granted ``on request'' for NFIS information. 
However, it is not possible to guarantee the confidentiality of this 
information in light of the Freedom of Information Act, since 
ultimately a court may be called on to decide the matter. Under the 
applicable statutes and regulations, a foreign banking organization can 
make a case for confidentiality by showing that disclosure is likely to 
result in competitive harm or an invasion of personal privacy. The 
Board will agree to grant a request for confidential treatment that is 
properly supported with the understanding that if a Board decision to 
deny a formal request for access to such information is challenged in 
court, the court will decide the matter. In view of these 
considerations, the Board decided to retain the current procedures 
regarding confidentiality.
    Explanation of national accounting standards. The Federal Reserve 
Board initially recommended that a respondent include a detailed 
explanation of national accounting standards and terminology with the 
FR Y-7 in the first year it files and thereafter in every year ending 
in ``5'' or ``0.'' This information would supplement the Board's 
understanding of the differences in accounting standards. Commenters 
requested that the Board clarify the scope of this proposed report 
item. Several commenters stated that they were not aware of any 
complete explanation of foreign accounting terminology and standards. 
Another commenter requested that the Federal Reserve accept 
explanations of the type filed with securities offerings statements 
with the Securities and Exchange Commission (SEC.) Another suggested 
that FBOs be permitted to submit a statement of material differences 
between Generally Accepted Accounting Principles (GAAP) and home 
country accounting requirements. After reviewing these comments, the 
Federal Reserve decided to drop the proposed report item, and will 
instead collect this information on an ad hoc 

[[Page 63523]]
basis. Respondents that are SEC reporters must include a copy of SEC 
form 20-F (OMB No. 3235-0288) with the FR Y-7. The SEC form 20-F is 
similar to SEC form 10-K (Annual Report Pursuant to Sections 13 and 
15(d) of the Securities and Exchange Act of 1934; OMB No. 3235-0063) 
and includes information on the differences between GAAP and the FBO's 
home country accounting standards.
    Bearer shareholdings. Two commenters stated that they may be unable 
to identify bearer shareholders that have a greater than 5 percent 
interest in their organization. However, since Item 4 collects 
information on ``known shareholders'' there is no need to change this 
report item.
    Risk-based capital schedule. No comments were received on this 
aspect of the proposal. This schedule breaks out details of an FBO's 
risk-based capital computations. If this information is confidential in 
the home country, the FBO would have the option of providing this 
information in the FR 2068. For banks from countries that do not follow 
a risk-based capital format, information on capital computations 
required by their home country banking supervisor(s) would be required.
    Q and A checkboxes. No comments addressed the proposal to add 
several questions that require either a yes or no response, or a box to 
check, to assist the respondents in providing a complete report and to 
assist Federal Reserve Banks in their review and analysis. The 
checkboxes will reduce the need for follow-up correspondence with 
respondents.
    Nonbank Financial Information Summary (NFIS). The Federal Reserve 
will collect summary financial information on U.S. nonbank subsidiaries 
of FBOs on the NFIS. The free-form financial statements for U.S. 
nonbank subsidiaries have been replaced by specific schedules of core 
financial information that will be processed electronically. The new 
reporting format includes a principal schedule of thirty-three balance 
sheet and income statement items (such as loans, securities, assets, 
capital, and income) and four supporting schedules with a total of 
forty-one items. Nonbanking subsidiaries with total assets of more than 
$1 billion must complete the principal and supporting schedules; 
nonbanking subsidiaries with total assets between $150 million and $1 
billion must complete only the principal schedule; and nonbanking 
subsidiaries with total assets of less than $150 million must respond 
only to six core items on the principal schedule; these items are 
denoted by an asterisk on the reporting form. This information will 
enable the Federal Reserve to better assess the condition of the U.S. 
nonbank financial activities of foreign banking organizations. 
Commenters made several suggestions regarding the NFIS including 
exempting various types of companies from reporting, clarifying the 
instructions, and eliminating one item from the schedule. Each of the 
comments is discussed below.
    Exemptions from NFIS reporting. Two commenters requested exemptions 
for Regulation K, section 211.23(f)(3) (incidental activities) 
companies and another commenter suggested that the Board exempt section 
4(c)(8) subsidiaries of section 2(h) (of the Bank Holding Company Act) 
companies from filing the NFIS because section 2(h) companies are 
themselves exempt. These commenters also requested that section 4(c)(9) 
companies be exempt from filing the NFIS. However, section 4(c)(8) and 
section 4(c)(9) companies are active financial entities in the United 
States and are subject to the same rules as U.S. subsidiaries operating 
under the Bank Holding Company Act. The incidental activities covered 
under section 211.23(f)(3) typically involve brokerage, investment 
advisory, and foreign exchange operations. The Federal Reserve believes 
that the NFIS information should be provided on these companies because 
they are engaged in financial activities in the United States and their 
parent FBOs are subject to supervision and regulation by the Federal 
Reserve. Thus, the Board believes that 4(c)(8), 4(c)(9), and 
incidental-activities companies should file the NFIS.
    A commenter suggested that companies whose shares are held by the 
FBO as a result of debts previously contracted or in a fiduciary 
capacity should be exempt from filing the NFIS. The Board agrees that 
individual holdings should be exempt. However, DPC subsidiaries and 
companies formed specifically to hold fiduciary entities should file in 
the same manner as other companies.
    Submitting a consolidated NFIS. A commenter stated that the Board 
proposed to significantly limit the conditions under which NFIS 
statements can be submitted on a consolidated basis, and asked that 
FBOs not be required to seek annual prior approval from Federal Reserve 
Banks. Rather, they favored gaining initial approval once those 
conditions were met and for as long as they remained in effect. This 
commenter further requested that Federal Reserve Banks be given the 
discretion to make exceptions to the consolidation rules. The Federal 
Reserve concurred and has amended the NFIS instructions.
    Book value of nonbank subsidiaries on the NFIS. Five commenters 
noted that the amount at which a nonbank subsidiary is carried on the 
books of the FBO is highly confidential in some countries and should be 
collected in the FR 2068. After review, the Board decided that this 
information is not critical, and deleted the item from the form.
    Fiscal-year reporting on the NFIS. A commenter asked that the Board 
clarify in the instructions to the NFIS that financial information may 
be prepared as of the end of the fiscal year of the nonbank subsidiary 
and not as of the end of the fiscal year of the FBO. The instructions 
have been clarified.
FR Y-7A
    The FR Y-7A will collect structure information that was previously 
reported in Section II of the FR Y-7. Apart from making this a stand-
alone report, two initially proposed revisions to the collection 
process were to collect the information on a flow basis and to 
implement exception reporting. Flow-basis reporting would have allowed 
the Federal Reserve to recommend eliminating the FR 4002. Commenters 
indicated that flow-basis reporting would be very burdensome. The 
Federal Reserve agreed that flow basis reporting would be burdensome 
and dropped this revision. However, this required dropping the proposal 
to discontinue the FR 4002. Annual exception reporting is designed to 
reduce burden and will be implemented. Annual exception reporting 
requires completing the entire FR Y-7A only once. In subsequent years, 
the Federal Reserve Bank will provide the FBO with a printout of its 
previously submitted structure information. The FBO will review the 
printout and annotate the information to indicate changes, instead of 
completing an entire report each year. This is helpful for those banks 
whose operations are not highly automated, and also may ease the burden 
of translating the report into English. Other comments included a 
request to modify Regulation K to exempt certain holdings from 
reporting, to refine the General Instructions of the FR Y-7A, and to 
clarify the instructions on reporting DPC shareholdings, fiduciary 
holdings, and dormant companies.
    Flow-basis reporting. The Federal Reserve reviews the structure and 
activities of FBOs to determine if they are in compliance with 
applicable statutes and regulations. The Board initially proposed 
collecting information in Section II (``Activities Conducted in the 
United States'') of the 

[[Page 63524]]
old FR Y-7 in a stand-alone report, the FR Y-7A, which would consist of 
two items: ``U.S. Banking Activities'' and ``U.S. Nonbanking 
Activities.'' The Board further proposed that existing reporters 
complete both items in the first year and that new reporters complete 
both items at the time of their first filing. Subsequent changes in the 
information originally provided would be reported to the appropriate 
Federal Reserve Bank on a flow basis; that is, within thirty calendar 
days of such changes.
    However, commenters objected to the burden associated with flow-
basis reporting and asked that current reporting requirements be 
continued. They stated that the proposed reporting requirements would 
be very burdensome, particularly since FBOs would need to poll their 
affiliates regularly to determine organizational changes. They stated 
that not every structure and activity change is regularly reported to 
the parent organization. In addition, although the statutory control 
threshold is 25 percent or more in the United States, the control 
threshold in many other nations is 50 percent. Under U.S. statutes, 
when ownership of an affiliate reaches 25 percent, the affiliate would 
normally be considered a subsidiary, but in other countries it might be 
considered an ``investment''. The FBO may not have the legal authority 
to require information from an affiliate in which its ownership is only 
25 percent.
    Although the Federal Reserve would prefer to have this information 
reported as changes occur, the burden on the reporters outweighs the 
benefits to the Federal Reserve of receiving it within thirty calendar 
days of each change. Accordingly, the Board dropped the proposal to 
require flow-basis reporting. However, structure changes that require 
monitoring for compliance with the Bank Holding Company Act must 
continue to be reported within thirty days of the end of each quarter 
on the FR 4002, as required by Regulation K; all other changes must be 
reported annually on the FR Y-7A.
    Request to modify Regulation K. A commenter stated that the costs 
of flow basis reporting would exceed the benefits of discontinuing the 
FR 4002, and requested modification of section 211.23(h) of Regulation 
K. Section 211.23(h) requires reporting, within thirty days of the end 
of a quarter, of all newly acquired shares of companies engaging in 
activities in the United States or of any U.S. activities commenced by 
companies in which the FBO already owns shares. Thus, this section 
requires the FBO to report information collected in the FR 4002. The 
requested modification would exempt respondents from reporting 
investments or activities permitted under section 211.23(f)(5), 
activities that are not incidental to international banking.
    Reporting of non-voting equity interests in excess of 25 percent of 
any class of non-voting shares. The Federal Reserve initially 
recommended that FBOs report on the FR Y-7A investments of 25 percent 
or more of any class of non-voting equity of banks, bank holding 
companies, and other companies. Commenters said that reporting should 
not be required since the statutory control indicia normally do not 
apply to non-voting shares. The Board disagreed and remains concerned 
with foreign ownership of U.S. financial institutions of this 
magnitude, irrespective of the non-voting status of the shares. Several 
commenters indicated that reporting such non-voting interests in U.S. 
companies, other than banks and bank holding companies, would represent 
a significant increase in burden. In the interest of reducing burden, 
reporting will be limited to U.S. banks and bank holding companies, 
including all types of non-voting interests such as ``equity kickers''. 
This conforms to the reporting requirements of the Bank Holding Company 
Report of Changes in Investments and Activities (FR Y-6A; OMB No. 7100-
0124) for domestic bank holding companies. One commenter requested that 
if non-voting equity interests must be reported then the requirement 
not be made retroactive. The Board decided to make the requirement 
retroactive so that the Federal Reserve will be cognizant of all such 
control situations. If an FBO cannot produce this information in a 
timely manner, a reasonable extension of time may be granted.
    Reporting of shares held as a result of debts previously 
contracted. Comments were made on two revisions to how DPCs are 
reported. One commenter objected to the amount of information required 
about each DPC and proposed that the Board require only a listing of 
such holdings. The Board did not agree that a simple listing would 
provide sufficient information for monitoring these holdings. Another 
commenter stated that lowering the threshold for reporting DPCs, from 
ownership or control of 25 percent of any class of voting shares to 
ownership or control of 5 percent, is burdensome, especially when non-
U.S. companies are involved, and asked that the 5 percent threshold be 
applied to only U.S. banking and nonbanking offices and subsidiaries. 
The commenters noted that in addition to the increase in the number of 
reportable holdings, the information would be difficult to obtain 
because these companies may be located worldwide. Further, the FBO may 
not have the authority to require these companies to share information. 
The Board decided to lower the threshold to 5 percent to ensure 
consistent treatment of domestic and foreign banking organizations 
(``national treatment'') and to maintain consistency with FR Y-6A 
reporting requirements.
    General Instructions. A commenter recommended clarifying the 
General Instructions to the FR Y-7A to distinguish companies that do 
business in the United States from those that have no U.S. presence, 
suggesting that the reporting requirements apply only to all U.S. 
companies and those non-U.S. companies that engage in business in the 
United States. The Board agreed and made the clarification. Another 
commenter noted that the list of reportable companies on page 1 of the 
instructions to the FR Y-7A is confusing and asked that it be 
eliminated. The Board has clarified the instructions. Two other 
commenters asked that the term ``manages'' be deleted from the 
definition of control since the term's definition differs from the 
statutory definition. In considering this comment, the Board determined 
that the instruction was redundant and deleted it.
    Instructions on shares held in a fiduciary capacity. A commenter 
suggested that the Board modify the General Instructions to the FR Y-7A 
so the instructions state more explicitly the requirement that FBOs 
disclose fiduciary holdings of shares only under either of the 
following two conditions:
    (1) More than 5 percent of the shares of a company are held in a 
fiduciary capacity for the benefit of the foreign banking organization, 
its shareholders, or its employees; or
    (2) More than 5 percent of the shares in U.S. banks and bank 
holding companies are held in a fiduciary capacity by a subsidiary of 
the foreign banking organization that has the sole discretion to vote 
the shares.
This commenter also asked that the Board revise the instructions so 
that fiduciary holdings held for the benefit of employees or 
shareholders are reported only if they are held for the employees or 
shareholders as a class. The Board believes that the instructions 
adequately address the statutory and regulatory factors regarding 
fiduciary holdings. These instructions are similar to those provided 
for bank holding company reporters and therefore are consistent with 
the policy of national treatment.

[[Page 63525]]

    Instructions on reporting of shares held in dormant companies. A 
commenter requested that the Federal Reserve not require reporting of 
dormant companies in the FR Y-7A and suggested instead to require an 
FBO to report the cessation and re-commencement of a business activity. 
However, the disposition of such holdings would not be known if the FBO 
stopped reporting them. Such holdings need not be reported until the 
company becomes active, but once active, it must be reported until 
divested, even if it becomes dormant again.
FR 2068
    Five revisions were proposed for the FR 2068. After reviewing 
comments, one change was dropped and another was modified.
    Filing exemption. The Federal Reserve eliminated the filing 
exemption for small companies in light of financial problems that 
developed in financial institutions with a relatively small presence in 
the United States. This added thirty-one respondents to the panel.
    Earnings item. The Federal Reserve eliminated earnings information 
from the FR 2068 because this information is reported in the FR Y-7.
    Past due loans. FBOs now must report specified information on past 
due loans to replace similar information previously submitted on a 
free-form basis in the FR 2068. The initial proposal provided three 
alternative methods for reporting this information. This has been 
reduced to two alternatives, with no loss of flexibility for the 
respondent, by rewording the instructions. An FBO may submit either an 
abbreviated table of information which is similar to that collected 
from domestic banks, or it may submit the same type of information that 
is provided to its home country supervisor. Notwithstanding these 
alternatives, a commenter noted that certain banks do not routinely 
collect this information on a past-due basis, but on the basis of 
whether interest is accruing. The Federal Reserve believes that the 
instructions for the past-due loans item provide sufficient 
flexibility; furthermore, the General Instructions to the FR 2068 state 
that FBOs may request permission to provide substitute information when 
undue burden is imposed by a particular item.
    Filing directly with the Board. A proposed revision to the filing 
procedures of the FR 2068 would have required the FBO to submit the 
information to the appropriate Federal Reserve Bank rather than 
directly to the Board. The procedure of filing directly with the Board 
was developed because the FBOs desired strict confidentiality. Several 
commenters strongly advocated that this procedure be retained. One 
commenter, although not in objection to filing with Federal Reserve 
Banks, asked that the same security standards used by the Board be 
implemented at the Federal Reserve Banks. Specifically, the commenter 
requested that only one Federal Reserve Bank receive a copy of the FR 
2068, that the Federal Reserve Banks not permit other regulators to 
have access to the information, and that secure areas be set up for 
storing the information. In response to these comments, the Board has 
decided that the procedure of filing with the Board be retained.
    Expanded organization chart. The organization chart provides a 
listing of all corporate components of the foreign banking 
organization. The Federal Reserve initially proposed reporting both 
U.S. and non-U.S. interests of the principal shareholders of the FBO. 
Commenters noted that this requirement would significantly increase 
burden, and asked that the organization chart show only those foreign 
interests that are directly or indirectly engaged in business in the 
United States. Commenters also noted that a foreign banking 
organization normally cannot compel a shareholder to disclose personal 
information. In response to comments regarding burden and possible 
legal constraints with respect to collection of information on non-U.S. 
entities, the Federal Reserve dropped this reporting requirement with 
regard to strictly non-U.S. companies.
General Comments
    Commenters addressed several matters regarding both the FR Y-7 and 
the FR 2068, including the reporting universe, implementation date, and 
glossary.
    Instructions - Who Must Report. In response to a commenter, the 
following clarification has been added to the introduction to the 
General Instructions: ``The Annual Report of foreign banking 
organizations is required to be filed by companies that are directly or 
indirectly engaged in the business of banking in the United States.'' 
Also, the term ``organized under the laws of a foreign country'' was 
deleted from the ``Who Must Report'' section, because an FBO could be 
organized, for example, under Delaware laws, and operate overseas and 
in the United States. The instructions thus revised will conform to the 
statutory definition of a required reporter.
    Implementation date. A commenter requested that the NFIS section of 
the FR Y-7 and the FR Y-7A be implemented as of December 31, 1995. This 
request will be accommodated because the Board intends to use this 
implementation date for all sections of the reports. FBOs whose fiscal 
years end prior to December 30, 1995, will use the existing FR Y-7 and 
FR 2068 forms.
    Glossary. A glossary has been prepared as part of the instructions 
to clarify certain terms and to reduce the number of footnotes in the 
forms. In response to comments, the Federal Reserve expanded the 
glossary to provide information on applicable statutes and regulations, 
defined additional terms, and clarified several definitions.
    Respondent Burden. Commenters provided various burden estimates, 
all of which were substantially higher than the Federal Reserve 
estimates. One commenter stated that the Federal Reserve's combined 
burden estimate for the FR Y-7 and FR 2068 of 41 hours was much lower 
than the actual time spent by some FBOs. However, this commenter's 
estimate represented the burden on some of the larger and more complex 
organizations. The Federal Reserve's burden estimates are an average 
across all sizes of institutions and incorporate the higher burdens of 
large institutions. The Federal Reserve believes that the original 
proposal, having been substantially modified in response to comments, 
does not significantly increase the burden averaged across all 323 
respondents.
    Apart from total burden estimates, there were three specific 
proposed changes that commenters stated would significantly increase 
burden. One of these proposed changes was dropped and one was scaled 
back.
    (1) The proposal that structure changes be reported on the proposed 
FR Y-7A on a flow basis, that is, within thirty days of their 
occurrence, was considered quite burdensome by commenters. The Federal 
Reserve decided not to require flow-basis reporting and dropped the 
proposal to discontinue the FR 4002, in which structure changes are 
reported quarterly.
    (2) The proposal that FBOs report, in the FR Y-7A, investments of 
25 percent or more of any class of non-voting equity of any company was 
scaled back. Now respondents report only such investments in U.S. banks 
and bank holding companies.
    (3) In the existing FR Y-7, an FBO must report each company in 
which it owns or controls 25 percent or more of any class of voting 
shares as a result of debts previously contracted. The Federal Reserve 
changed the threshold 

[[Page 63526]]
at which these shares are reportable, from 25 percent to 5 percent.
    The burden estimate for the existing FR Y-7 is 19.5 hours per 
response. Based on that estimate, along with net new burden, the 
Federal Reserve estimates that the collective burden for the FR Y-7 and 
FR Y-7A increased by one hour, to 20.5 hours per response. Considered 
separately, burden for the FR Y-7 is 12.0 hours and the FR Y-7A is 8.5 
hours. The burden estimate for the FR 2068 is unchanged from 20.5 hours 
per response.
    Final approval under OMB delegated authority of the extension, 
without revision, of the following report:
    2. Report title: Notification Pursuant to Section 211.23(h) of 
Regulation K on Acquisitions by Foreign Banking Organizations
Agency form number: FR 4002
OMB Docket number: 7100-0110
Frequency: On occasion
Reporters: Foreign Banking Organizations
Annual reporting hours: 80
Estimated average hours per response: 0.5
Number of respondents: 160
Small businesses are not affected.
    General description of report: This information collection is 
mandatory [12 U.S.C. Secs. 1844(c), 3106, and 3108(a)].
    This report is required within thirty days of the end of a quarter 
during which an FBO acquires shares of a company that engages, directly 
or indirectly, in business in the United States, or during which a 
foreign subsidiary of the FBO commences direct activity in the United 
States.
    Abstract: The Federal Reserve, in its original proposal to revise 
the FR Y-7 and FR 2068, proposed to eliminate the FR 4002, because 
proposed changes to the FR Y-7 would have made the FR 4002 redundant. 
(See Vol. 60, FR 1779, January 5, 1995.) After review of public 
comments, the Federal Reserve modified the originally proposed 
revisions to the FR Y-7 such that it became necessary to retain the FR 
4002.

    Board of Governors of the Federal Reserve System, December 5, 
1995.
William W. Wiles,
Secretary of the Board.
[FR Doc. 95-30036 Filed 12-8-95; 8:45 am]
Billing Code 6210-01-F