FFIEC002_FFIEC002S_20080410_omb

Supporting Statement for
the Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks
(FFIEC 002; OMB No. 7100-0032)
and 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; OMB No. 7100-0032)
Summary
The Board of Governors of the Federal Reserve System (Board) requests approval from the
Office of Management and Budget (OMB) to extend, with revision, the Federal Financial
Institutions Examination Council (FFIEC) Report of Assets and Liabilities of U.S. Branches and
Agencies of Foreign Banks (FFIEC 002; OMB No. 7100-0032) and 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 (NonU.S.) Bank (FFIEC 002S; OMB No. 7100-0032).1 The Board submits this request on behalf of the
Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency
(OCC). No separate submission will be made by either of those agencies.
The FFIEC 002 is required and must be submitted quarterly by U.S. branches and agencies of
foreign banks. All U.S. branches and agencies of foreign banks 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 (IBA). This report is mandated by the FFIEC for collection by
the Board, the FDIC, and the OCC (collectively the agencies) in accordance with procedures under
Title 10 of the Financial Institutions Regulatory Act. The FFIEC 002S is a mandatory supplement to
the FFIEC 002 and 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 a foreign bank.2 A separate supplement is
completed for each applicable foreign branch. The FFIEC 002S data improve U.S. deposit and
credit data and data on international indebtedness, and are of assistance to U.S. bank supervisors in
determining the extent of assets managed or controlled by the U.S. agency or branch of the foreign
bank.
The agencies propose to implement several revisions to the FFIEC 002 reporting
requirements. The proposed revisions would help to achieve consistency with the Reports of
Condition and Income (Call Report) (FFIEC 031 and FFIEC 041; OMB No. 7100-0036) filed by
insured commercial banks and state-chartered savings banks. The agencies propose (1) to revise the
officer signature requirements and contact information, (2) to delete several data items related to
bankers acceptances, (3) to modify the scope of securitizations that are included in the servicing,
securitization, and asset sale activities schedule (Schedule S), (4) to breakdown real estate loans by
category, (5) to add a new fair value schedule (Schedule Q) for the reporting of certain fair value
measurements and the use of the fair value option, (6) to revise time deposit data items related to
1

The FFIEC 002S is currently included under OMB number 7100-0273.
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.
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brokered time deposits, (7) to revise data items related to credit derivatives, (8) to revise data items
related to federal funds transactions and securities repurchase and resale agreement, and (9) to revise
deposit insurance assessments data item for FDIC-insured branch. The agencies are also proposing
to combine the FFIEC 002 and FFIEC 002S under one OMB control number, 7100-0032. The
agencies propose to implement changes to the FFIEC 002 and the FFIEC 002S effective with the
September 30, 2008, reporting date, with one exception. The Schedule O changes will be
implemented on an interim transition period, which covers the June 30, 2008, through
December 31, 2008, reporting dates. The current annual reporting burden for the FFIEC 002 is
estimated to be 24,024 hours. The proposed estimated annual burden for the revised FFIEC 002 is
26,400 hours, an increase of 2,376 hours. The current annual reporting burden for the FFIEC 002S
is estimated to be 1,560 hours and would remain unchanged.
Background and Justification
Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks
(FFIEC 002)
The agencies use the FFIEC 002 report for supervisory and regulatory purposes. The Board
also uses the data for monetary policy purposes. The report is similar to the Call Report required of
all U.S. commercial banks, although the FFIEC 002 collects fewer data items of information.
The IBA expresses the intent of the Congress to equalize the supervisory and regulatory
treatment between foreign and domestic-owned financial institutions operating in the United States,
which specifies that foreign banks’ branches and agencies in the United States are to be subject to
the supervisory authority of the U.S. federal banking agencies and that responsibility for federal
supervision is to be shared among the agencies.
As one step in carrying out the supervisory and regulatory responsibilities imposed by the
IBA, the agencies instituted the FFIEC 002 report in June 1980. The FFIEC 002 replaced a Federal
Reserve report, FR 886a that had been collected from U.S. branches and agencies since 1972. The
FFIEC 002 report was revised extensively effective December 1985, when several schedules were
deleted, data items were added to collect separate data on International Banking Facilities (IBFs),
and schedules were added covering quarterly averages (Schedule K), commitments and
contingencies (Schedule L), and past due loans (Schedule N). The report also was revised to
conform as closely as possible to the quarterly Call Report for domestic banks.
Effective June 2001, the agencies expanded the information collected in the FFIEC 002 to
facilitate more effective analysis of the impact of securitization and asset sale activities on credit
exposures, introduced a separate new schedule (Schedule S) that comprehensively captures
information related to securitization and asset sale activities, and eliminated the confidential
treatment for the information on Schedule N. Effective December 2001, the agencies changed the
manner in which branches and agencies report information on their trust activities. Branches and
agencies that previously filed the Annual Report of Trust Assets (FFIEC 001) instead began to file a
new Fiduciary and Related Services Schedule (Fiduciary Schedule) (Schedule T) as part of the
FFIEC 002. Branches and agencies that have fiduciary or related activity are required to report
certain trust information in Schedule T annually.
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In addition to its supervisory and regulatory uses, the FFIEC 002 report provides information
needed for monetary and financial analysis essential for the conduct of monetary policy. The
branches and agencies of foreign banks are a large and growing part of the U.S. banking system,
with assets exceeding $1 trillion as of March 31, 2001. The FFIEC 002 provides the benchmark data
needed to derive adequate weekly estimates from the sample report titled Weekly Report of Assets
and Liabilities for Large U.S. Branches and Agencies of Foreign Banks (FR 2069; OMB No.
7100-0030). The weekly estimates are used to analyze credit developments and sources and uses of
funds for the banking sector and to assess current financial developments within the entire U.S.
banking system. They help to interpret the bank credit and deposit information needed for both
monetary policy decisions and for gauging the response to those decisions.
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)
For a number of years foreign banks have conducted a large banking business at branches
domiciled in offshore centers, primarily in the Cayman Islands and the Bahamas. For a fee, foreign
banks are able to use these offshore branches to conduct a banking business free of any U.S. reserve
requirements or FDIC premiums. While nominally domiciled in these offshore centers, these
branches are often largely run out of the banks’ U.S. agency or branch office, with a separate set of
books but often with overlapping management responsibilities. The transactions of these offshore
branches are often largely with U.S. residents.
The FFIEC 002S report is collected for several reasons: (1) to monitor deposit and credit
transactions of U.S. residents; (2) to monitor the impact of policy changes such as changes in reserve
requirements; (3) to analyze structural issues concerning foreign bank activities in U.S. markets; (4)
to understand flows of banking funds and indebtedness of developing countries in connection with
data collected by the International Monetary Fund and the Bank for International Settlements 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.
The FFIEC 002S collects detail on transactions with U.S. residents and with residents of the
banks’ home country. In most cases these data cover a large proportion of their total activities since
many of the non G-103 bank branches have heavy exposures to their home countries and G-10 banks
are dealing largely with U.S. customers. The data improve U.S. deposit and credit data and data on
international indebtedness, and are of assistance to U.S. bank supervisors in determining the extent
of assets managed or controlled by the U.S. agency or branch of the foreign bank. In theory a
foreign bank with an offshore branch and no U.S. presence would escape reporting. In practice this
omission is likely to be relatively minor because each of the fifty largest non-U.S. banks in the world
operates at least one agency or branch in the United States.

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The Group of Ten is made up of eleven industrial countries (Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, Switzerland, the United Kingdom, and the United States) which consult and cooperate on
economic, monetary and financial matters.

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Description of Information Collection
The reporting panel for the FFIEC 002 includes all U.S. branches and agencies (including
their IBFs) of foreign banks, whether federally licensed or state chartered, insured or uninsured.
Each branch or agency of a particular foreign bank must submit a separate quarterly report, with one
exception. A foreign bank may submit a request to the appropriate Federal Reserve Bank to
consolidate reporting for two or more offices, provided that (1) the offices are located in the same
city or metropolitan area, the same state, and the same Federal Reserve District, and (2) the
consolidated report does not consolidate branches with agencies or insured branches with uninsured
branches.
While conforming generally to the U.S. commercial bank Call Report, the format of the
FFIEC 002 has been designed to reflect the portfolio patterns of branches and agencies of foreign
banks and their institutional character. There is more disaggregated reporting of foreign and
domestic customers than is required in the Call Report for domestic banks, and Schedule M of the
FFIEC 002 provides information on claims on, and liabilities to, the foreign bank head office and
other related institutions of the U.S. branches and agencies.
The FFIEC 002 consists of a summary schedule of assets and liabilities (Schedule RAL) and
several supporting schedules. Information is required in each schedule on balances of the entire
reporting branch or agency. On the schedules for cash (Schedule A), loans (Schedule C), and
deposits (Schedule E), separate detail is reported on balances of IBFs. Unlike the Call Report for
domestic banks, the FFIEC 002 collects no income data.
The FFIEC 002S covers all of the foreign branch’s assets and liabilities, regardless of the
currency in which they are payable. The supplement also covers transactions with all entities, both
related and nonrelated, regardless of location. All due from/due to relationships with related
institutions, both depository and nondepository, are reported on a gross basis, that is, without netting
due from and due to data items against each other. This reporting treatment of due to/due from
transactions with related institutions parallels the treatment called for in Schedule M of the
FFIEC 002, Due from/Due to Related Institutions in the U.S. and in Foreign Countries.
Both the assets and the liabilities sections of the supplement call for detail by location and
type of the other party to the transaction and by whether the transaction is denominated in U.S. or
non-U.S. currency. In addition, for claims on U.S. addressees (other than related depository
institutions) denominated in U.S. dollars, detail on type of claim is required. In general, the
definitions of the specific types of claims (that is, portfolio items) called for, and their reporting
treatment, correspond to the FFIEC 002 definitions of those data items. Further detail on
transactions with U.S. addressees denominated in U.S. dollars is reported in a Memoranda section.
All data items are reported in U.S. dollars. Transactions denominated in other currencies are
converted to U.S. dollars under currency translation procedures used for the FFIEC 002.
The Federal Reserve offers an electronic data transmission facility through which
respondents to various reports collected by the Federal Reserve may submit information. The
Internet Electronic Submission (IESUB) system was offered to U.S. branches and agencies of
foreign banks for electronic entry of the FFIEC 002 and the FFIEC 002S beginning in 1990.

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Proposed Revisions Effective June 30, 2008
Deposit Insurance Assessment Revisions for FDIC-Insured Branches
On November 30, 2006, the FDIC published a final rule amending Part 327 of its regulations,
Assessments, to improve and modernize its operational systems for deposit insurance assessments
(71 FR 69270). These amendments to Part 327 revised the definition of the assessment base for
deposit insurance purposes to be consistent with Section 3(l) of the Federal Deposit Insurance Act
(FDI Act). This was intended to eliminate the need for periodic updates to the FDIC’s assessment
regulations in response to outside factors and allow a simplification of the associated reporting
requirements. In addition, to address timing issues with quarter-end reporting, under amended
Part 327, the FDIC will use daily average deposits and exclusions over the quarter instead of
quarter-end totals for deposits and exclusions to compute the assessment base for insured institutions
with $1 billion or more in assets and other institutions that meet specified criteria. All other insured
institutions may opt permanently to determine their assessment base using daily averages.
In conjunction with these amendments to Part 327 of the FDIC’s regulations, the agencies
revised and reduced the overall reporting requirements related to deposit insurance assessments in
the Call Report in order to simplify regulatory reporting. These assessment data reporting changes
included an interim transition period during 2007 with final implementation of the revised Call
Report requirements taking place in 2008. The agencies are proposing to make comparable changes
to the reporting requirements related to deposit insurance assessments in Schedule O of the
FFIEC 002 for those branches of foreign banks that are insured by the FDIC. These proposed
revised reporting requirements would contain the following key elements:
•

•
•
•

Insured branches would separately report (a) gross deposits as defined in Section 3(l) of the
FDI Act (12 U.S.C. 1813(l)) before any allowable exclusions, (b) allowable exclusions,
including foreign deposits, and (c) foreign deposits;
The same data items would be reported for both quarter-end and daily average deposits;
All insured branches would report using quarter-end deposits, allowable exclusions, and
foreign deposits; and
All insured branches with $1 billion or more in total claims on nonrelated parties, and other
insured branches that meet specified criteria, would also report daily averages for deposits,
allowable exclusions, and foreign deposits in addition to quarter-end amounts.

The agencies would also provide an interim transition period covering the June 30, 2008,
through December 31, 2008, report dates during which insured branches would have the option to
submit Schedule O using either the current or revised formats for reporting data for measuring their
assessment base. An insured branch that chooses to begin reporting under the revised format in any
quarter during the interim period would be required to continue to report under the revised format
through the rest of the interim period and would not be permitted to revert back to the current
reporting format. The revised reporting format would take effect for all insured branches on
March 31, 2009, at which time the current reporting format would be eliminated. Although no
insured branch that chose to report under the revised format during the 2008 interim period would be
required to report daily averages during this period, any insured branch could elect to report daily

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averages as of any quarter-end report date (beginning June 30) in 2008. However, once an insured
branch begins to report daily averages (even during the interim period), it would be required to
continue to report daily averages each quarter thereafter in Schedule O of its FFIEC 002.
At present, 20 data items are required in Schedule O of the FFIEC 002 to determine an
insured branch’s assessment base. As proposed by the agencies, the changes to Schedule O would
effectively reduce the number of reported data items to as few as two for certain small insured
branches (without foreign deposits) and no more than six for other insured branches. Specifically,
the agencies propose to replace data items 1 through 7 and Memorandum items 4 and 5 (including
their sub items) on Schedule O, Other Data for Deposit Insurance Assessments, with the following
six data items:
•
•
•
•
•
•

Total deposit liabilities before exclusions (gross) as defined in Section 3(l) of the FDI Act
and FDIC regulations;
Total allowable exclusions (including foreign deposits);
Total foreign deposits (included in total allowable exclusions);
Total daily average of deposit liabilities before exclusions (gross) as defined in Section 3(l)
of the FDI Act and FDIC regulations;
Total daily average of allowable exclusions (including foreign deposits); and
Total daily average of foreign deposits (included in total daily average of allowable
exclusions).

Thus, instead of starting with total demand deposits and total time and savings deposits as
reported in Schedule O of the FFIEC 002 and making adjustments to these reported deposits for
purposes of measuring an insured branch’s assessment base, which is the present method, the
computation of the insured branch’s assessment base under the FDIC’s amended assessment
regulations and these proposed revisions to the FFIEC 002 would start with the gross total deposit
liabilities that meet the statutory definition of deposits in Section 3(l) of the FDI Act before any
allowable exclusions from the definition. The total amount of allowable exclusions from the
assessment base would be reported separately for any insured branch that maintains such records as
will readily permit verification of the correctness of its assessment base. The allowable exclusions,
which are set forth in Section 3(l)(5) and other sections of the FDI Act and in the FDIC’s
regulations, include foreign deposits (including International Banking Facility deposits), reciprocal
balances, drafts drawn on other depository institutions, pass-through reserve balances, depository
institution investment contracts, and deposits accumulated for the payment of personal loans that are
assigned or pledged to assure payment at maturity. The net amount of unposted debits and credits
would no longer be considered within the definition of the assessment base.
The agencies believe that the amount of gross total deposit liabilities that meet the statutory
definition of deposits is typically found in and supported by the control totals in an insured branch’s
deposit systems that provide the detail sufficient to track, control, and handle inquiries from
depositors about their specific individual accounts. These deposit systems can be automated or
manual. In any case, control totals for deposit liabilities should be readily available, which should
ease an insured branch’s transition to the revised Schedule O reporting requirements. Compared to
the amount of information that an insured branch currently reports in order to determine its
assessment base, the proposed changes to the Schedule O reporting requirements should also

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facilitate the reporting of daily averages for deposits and allowable exclusions since many of the
presently reported adjustments will not need to be tracked and averaged separately.
In addition to quarter-end balance reporting, insured branches that meet certain criteria
would be required to report average daily deposit liabilities, average daily allowable exclusions, and
average daily foreign deposits to determine their assessment base effective March 31, 2009. The
amounts to be reported would be averages of the balances as of the close of business for each day for
the calendar quarter. For days that an insured branch is closed (e.g., Saturdays, Sundays, or
holidays), the amounts outstanding from the previous business day would be used. An insured
branch is considered closed if there are no transactions posted to the general ledger as of that date.
The agencies are proposing to require an insured branch to report daily averages beginning
March 31, 2009, if it reports $1 billion or more in total claims on nonrelated parties in data item 1.i,
column A, of Schedule RAL of the FFIEC 002 for March 31, 2008, regardless of the amount its total
claims on nonrelated parties in subsequent quarters. In addition, if an insured branch reports $1
billion or more in total claims on nonrelated parties in Schedule RAL in two consecutive FFIEC 002
reports beginning with its June 30, 2008, report, daily average reporting would begin on the later of
March 31, 2009, or the report date six months after the second consecutive quarter. An insured
branch reporting less than $1 billion in total claims on nonrelated parties in Schedule RAL of its
FFIEC 002 for March 31, 2008, would be permitted to continue to determine its assessment base
using quarter-end balances until it met the two-consecutive-quarter total claims size test for
reporting daily averages unless it opted to determine its assessment base using daily averages. After
an insured branch begins to report daily averages for its total deposits, allowable exclusions, and
foreign deposits, either voluntarily or because it is required to do so, the insured branch would not be
permitted to switch back to reporting only quarter-end balances.
Under this proposal, insured branches will continue to report information on the number and
amount of deposit accounts, the estimated amount of uninsured deposits (if total claims on
nonrelated parties are $1 billion or more), and preferred deposits in Memorandum items 1 through 3
of Schedule O. However, the agencies are proposing to reduce the reporting frequency for the
memorandum item for preferred deposits. This memorandum item would be reported only as of
December 31 each year, which is consistent with the reporting frequency in the Call Report, rather
than quarterly as at present.
Proposed Revisions Effective September 30, 2008
Officer Signature Requirements and Contact Information
Considering the importance of data quality, the agencies believe that it is most appropriate
for the branch or agency’s chief financial officer (or the individual performing an equivalent
function) to ensure that the FFIEC 002 and FFIEC 002S are reported accurately. The agencies are
proposing to revise the existing officer signature requirement so that the FFIEC 002 and
FFIEC 002S must be signed by the branch or agency’s chief financial officer rather than by any
authorized officer of the branch or agency. In signing the FFIEC 002 and FFIEC 002S, the chief
financial officer would attest that the reporting forms have been prepared in conformance with the
instructions issued by the FFIEC and are true and correct to the best of the officer’s knowledge and

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belief. The agencies would also retain the existing requirement for the branch or agency’s senior
executive officer to sign the report.
The agencies are also proposing to add contact information (name, title, e-mail address,
telephone number, and fax number) for the chief financial officer and another person to whom
questions about the reports should be directed to facilitate communication between the agencies and
the branch or agency concerning the FFIEC 002 and FFIEC 002S.
Bankers Acceptances
The FFIEC 002 balance sheet (Schedule RAL) requires branches and agencies to separately
disclose the amount of their Customers’ liability to this branch or agency on acceptances outstanding
(data items 1.g.(1) and 1.g.(2)) and their Branch or agency liability on acceptances executed and
outstanding (data item 4.d). On the loan schedule (Schedule C) branches and agencies disclose
Holdings of own acceptances included in Schedule C, part I, item 4 (data item M.2). On the
derivatives and off-balance-sheet items schedule (Schedule L) branches and agencies disclose
Participations in acceptances conveyed to others by the reporting branch or agency (data item 5).
On the confidential due from/due to related institutions in the U.S. and in Foreign Countries
schedule (Schedule M, Part V) branches and agencies disclose Participations in acceptances
conveyed to related depository institutions by the reporting branch or agency (data item 5). Over
time, the volume of acceptance assets and liabilities as a percentage of industry assets and liabilities
has declined substantially to a nominal amount, with only a small number of branches and agencies
submitting these data items. The agencies are proposing to delete these six data items and branches
and agencies would be instructed to include any acceptance assets and liabilities (other than holdings
of the reporting branch or agency’s own acceptances) in Other assets and Other liabilities,
respectively, on the FFIEC 002 balance sheet.
Scope of Securitizations to Be Included in Schedule S
In column G of Schedule S, Servicing, Securitization, and Asset Sale Activities, branches
and agencies submit information on securitizations and on asset sales with recourse or other sellerprovided credit enhancements involving loans and leases other than those covered in columns A
through F. Although the scope of Schedule S was intended to cover all of a branch’s or agency’s
securitizations and credit-enhanced asset sales, as currently structured column G does not capture
transactions involving assets other than loans and leases. As a result, securitization transactions
involving such assets as securities, for example, have not been submitted in Schedule S. Therefore,
the agencies propose to revise the scope of column G to encompass All Other Loans, All Leases, and
All Other Assets to ensure that they can identify and monitor the full range of branches’ and
agencies’ involvement in and credit exposure to securitizations and asset sales. As a result, column
G would begin to reflect securitization transactions involving such assets as securities. With fewer
than five branches and agencies submitting data on securitizations in column G of Schedule S at
present, the proposed change in the scope of column G is expected to affect only a nominal number
of branches and agencies.

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Breakdown of Real Estate Loans by Category
FFIEC 002 reporters have become increasing involved in real estate lending and the agencies
are proposing that Loans secured by real estate (Schedule C, data item 1) be broken out by category
in order to better track this activity. The proposed change would also make the FFIEC 002 more
consistent with the Call Report. Specifically, the agencies are proposing to add the following
categories of loans secured by real estate:
•
•
•
•
•
•

Construction, land development, and other land loans;
Loans secured by farmland (including farm residential and other improvements);
Revolving, open-ended loans secured by 1-4 family residential properties and extended
under lines of credit;
Closed-end loans secured by 1-4 family residential properties;
Loans secured by multi-family (5 or more) residential properties; and
Loans secured by nonfarm nonresidential properties.
Reporting of Certain Fair Value Measurements and the Use of the Fair Value Option

On September 15, 2006, the Financial Accounting Standards Board (FASB) issued Statement
No. 157, Fair Value Measurements (FAS 157), which generally is effective for banks and other
entities for fiscal years beginning after November 15, 2007. On February 15, 2007, the FASB issued
Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (FAS 159),
which is effective for banks and other entities for fiscal years beginning after November 15, 2007.
Earlier adoption of FAS 157 is permitted as of the beginning of an earlier fiscal year, provided the
entity has not yet issued a financial statement or filed an FFIEC 002 for any period of that fiscal
year. Early adoption of FAS 159 was also permitted provided the entity also elected to apply FAS
157 at the same date or earlier. In addition, the FASB also issued Statement No. 155, Accounting
for Certain Hybrid Financial Instruments (FAS 155), and Statement No. 156, Accounting for
Servicing of Financial Assets (FAS 156), in 2006.
The fair value measurements standard provides guidance on how to measure fair value and
requires entities to disclose the inputs used to measure fair value based on a three-level hierarchy for
all assets and liabilities that are remeasured at fair value on a recurring basis.4 FAS 155, FAS 156,
and FAS 159 allow entities to irrevocably elect to report certain financial and servicing assets and
liabilities at fair value with the changes in fair value included in earnings. This accounting election
is referred to as a fair value option.
The agencies are proposing to add a new Schedule Q to the FFIEC 002 to collect data, by
major asset and liability category, on the total fair value of those assets and liabilities within the
category to which a fair value option has been applied along with separate disclosure of the amount
4

The FASB’s three-level fair value hierarchy gives the highest priority to quoted prices in active markets for identical
assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 1 inputs are quoted prices in
active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date
(e.g., the FFIEC 002 reporting date). Level 2 inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or
liability.

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of such assets and liabilities within the category whose fair values were estimated under Levels 1, 2,
and 3 of the FASB’s fair value hiearchy. The schedule would also include a data item for each asset
and liability category that would allow branches and agencies to report any amounts netted in the
determination of total fair value reported for that category on Schedule RAL. The categories are:
•
•
•
•
•
•

Securities held for purposes other than trading with changes in fair value reported in current
earnings;
Loans and leases;
All other financial assets and servicing assets;
Deposit liabilities;
All other financial liabilities and servicing liabilities; and
Loan commitments (not accounted for as derivatives).

In addition, the agencies propose to collect fair value data on trading assets and trading
liabilities in new Schedule Q from those branches and agencies that reported trading assets (the sum
of Schedule RAL, data items 1.f.1 and 1.f.2, column A) of $2 million or more for any of the four
preceding quarters.5 In the proposed new schedule, such entities would report the total fair value
carrying amount of trading assets and trading liabilities as well as a breakdown of these assets and
liabilities into the three fair value levels under FASB’s fair value hierarchy and any netted amounts.
Trading assets and trading liabilities are required to be reported at fair value and, thus, are not
covered under the fair value option. The proposed change would also make the FFIEC 002 more
consistent with the Call Report.
The agencies are also proposing to add memorandum items to capture the fair value and
unpaid principal balance of loans measured at fair value under a fair value option. One set of
memorandum items would apply to such loans that are reported in Other trading assets (data item
1.f.2) on Schedule RAL and another set would apply to such loans that are reported on Schedule C.
These proposed memorandum items would collect data for the following categories of loans:
•
•
•
•
•
•
•
•

Construction, land development, and other land loans;
Loans secured by farmland (including farm residential and other improvements);
Revolving, open-ended loans secured by 1-4 family residential properties and extended
under lines of credit;
Closed-end loans secured by 1-4 family residential properties;
Loans secured by multi-family (5 or more) residential properties;
Loans secured by nonfarm nonresidential properties;
Commercial and industrial loans; and
Other loans.
These additional data items are necessary to enable the agencies to understand the differences

5

For example, if a branch or agency reported trading assets of $2 million or more for the first time in its FFIEC 002 for
March 31, 2008, it would begin to report the proposed fair value data on trading assets and trading liabilities in
Schedule Q in its FFIEC 002 for June 30, 2008. Assuming the branch or agency reported trading assets of less than $2
million in its FFIEC 002 for June 30, 2008 and subsequent report dates, it would complete the Schedule Q items for
trading assets and liabilities in its FFIEC 002 for June 30, 2008, through March 31, 2009, but would discontinue
completing these items beginning June 30, 2009.

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between fair value and contractual cash flows for loans to which the fair value option is applied and
to improve the agencies’ ability to make comparisons among entities that elect a fair value option
and those that do not, consistent with proposed Call Report changes.
Time Deposits Data
The Federal Reserve uses data from Schedule E, Deposit Liabilities, to ensure accurate
construction of the monetary aggregates for monetary policy purposes. In order to more accurately
calculate the monetary aggregates, the agencies propose to revise Total time deposits of $100,000 or
more (data item M.1.a). Memorandum item 1.a would be revised to exclude brokered time deposits
issued in denominations of $100,000 or more that are participated out by the broker in shares of less
than $100,000 as well as brokered certificates of deposit issued in $1,000 amounts under a master
certificate of deposit (when information on the number of $1,000 amounts held by each of the
broker’s customers is not readily available to the branch or agency). A corresponding change would
be made to Memorandum item 1.c, Time certificates of deposit of $100,000 or more with remaining
maturity of more than 12 months.
In addition, as a result of the increase in the deposit insurance limit for certain retirement
plan deposit accounts from $100,000 to $250,000, a new Memorandum item 1.b, Individual
Retirement Accounts (IRAs) and Keogh Plan accounts included in Memorandum item 1.a, ‘Total
time deposits of $100,000 or more,’ above, would be added to Schedule E to separately identify the
portion of the total time deposits of $100,000 or more reported in Memorandum item 1.a that
represents IRA and Keogh Plan accounts. This new memorandum item is also necessary to support
the accurate calculation of the monetary aggregates.
The agencies are proposing a similar instructional change for Schedule O that would direct
insured branches to include brokered time deposits, as discussed above, in Memorandum item 1.a,
Deposit accounts of $100,000 or less, and to exclude these brokered time deposits from
Memorandum item 1.b, Deposit accounts of more than $100,000.
Information on Credit Derivatives
Branches and agencies currently report the notional amounts of the credit derivatives on
which they are the guarantor and on which they are the beneficiary as well as the gross positive and
negative fair values of these credit derivatives in Memoranda items 1 and 2 of Schedule L,
Derivatives and Off-Balance Sheet Items, and Schedule M, Due from/Due to Related Institutions in
the U.S. and in Foreign Countries, Part V. The agencies propose to revise these existing data items
so that branches and agencies with credit derivatives will provide a breakdown of these notional
amounts by type of credit derivative: credit default swaps, total return swaps, credit options, and
other credit derivatives, with those where the branch or agency is the guarantor reported in column
A and those where the branch or agency is the beneficiary in column B. Branches and agencies
would continue to separately report the gross positive and negative fair values of credit derivatives
on which they are the guarantor and the beneficiary without a breakdown by type of credit
derivative. The agencies are also proposing to move credit derivatives from a memoranda item to a
data item on Schedule L and Schedule M, Part V.

11

Revising the Reporting of Federal Funds Transactions and Securities Repurchase
and Resale Agreements
On Schedule RAL, the agencies are proposing to revise the existing breakdowns of federal
funds sold and securities purchased under agreements to resell that are reported in data items 1.d.1
and 1.d.2, respectively. First, the counterparty coverage of the federal funds sold and securities
resale agreements reported in data items 1.d.1.a and 1.d.2.a would be changed from depository
institutions in the U.S. to commercial banks in the U.S. This revision would facilitate the derivation
of interbank loans, used for a weekly Federal Reserve release.
Second, the agencies are proposing to add two-way breakdowns of federal funds sold to
others, currently reported in data item 1.d.1.b, and securities resale agreements with others, currently
reported in data item 1.d.2.b. In the first two-way breakdown, branches and agencies would
separately report federal funds sold to nonbank brokers and dealers in securities and federal funds
sold to others (including depository institutions in the U.S. other than commercial banks). Similarly,
branches and agencies would separately report securities resale agreements with nonbank brokers
and dealers in securities and securities resale agreements with others (including depository
institutions in the U.S. other than commercial banks). This revision would facilitate the derivation
of total security loans, used for a weekly Federal Reserve release.
On the liability side, the agencies are proposing a more limited revision of the existing
breakdowns of federal funds purchased and securities sold under agreements to repurchase that are
reported in data items 4.b.1 and 4.b.2, respectively. Thus, the counterparty coverage of the federal
funds purchased and securities repurchase agreements reported in data items 4.b.1.a and 4.b.2.a
would be changed from depository institutions in the U.S. to commercial banks in the U.S. As a
result, federal funds purchased from and securities repurchase agreements with depository
institutions in the U.S. other than commercial banks would be included in data item 4.b.1.b, Federal
funds purchased from others, and data item 4.b.2.b, Securities sold under agreements to repurchase
with others, respectively. This would facilitate the collection of data on borrowings from
commercial banks in the U.S. and borrowings from others that is published weekly in Federal
Reserve releases. A further breakdown of the Other borrowed money reported in data item 4.c of
Schedule RAL would not be required since data on such borrowings from commercial banks in the
U.S. is already available from Schedule P of the FFIEC 002.
Instructional Clarifications
For Schedule E, Column D, branches and agencies report all deposit liabilities of their IBF.
A footnote on the reporting form indicates that amounts in this column should exclude those IBF
liabilities to be reported as federal funds purchased and securities sold under agreements to
repurchase or as other borrowed money. In contrast, the FFIEC 002 instructions for Schedule E
state that branches and agencies should:
“Report in column D all deposit liabilities of the branch or agency’s International Banking
Facility liabilities, regardless of whether they are transaction or nontransaction accounts. For
purposes of this report, IBF deposit liabilities include deposits, placements, borrowings and
similar obligations represented by promissory notes, acknowledgements of advance, or
12

similar instruments that are not issued in negotiable or bearer form and that are issued to
other IBFs or to nonrelated non-U.S. addressees, including banks.”
Since the FFIEC 002 instructional language conflicts with the language in the footnote on the
reporting form, which provides correct guidance, the agencies will clarify the FFIEC 002
instructional language by removing the second sentence of the current instruction to Column D and
by deleting the word liabilities the second time it appears in the first sentence of the current
instruction.
Time Schedule for Information Collection
The FFIEC 002 and FFIEC 002S are collected as of the end of the last calendar day of
March, June, September, and December. U.S. branches and agencies of foreign banks must submit
the FFIEC 002 and FFIEC 002S to the appropriate Federal Reserve Bank within thirty calendar days
following the report date. After the processing and editing functions have been completed, the
Board sends the data to the FDIC and OCC for their use in monitoring the U.S. activities of foreign
banks under their supervision. Aggregate data for all U.S. branches and agencies that file the
FFIEC 002 are published in the Federal Reserve Bulletin and are also used in developing flow of
funds estimates and the estimates published in the Federal Reserve weekly H.8 statistical release,
Assets and Liabilities of Commercial Banks in the United States. Aggregate data for the
FFIEC 002S are available to the public upon request.
Individual respondent data, excluding confidential information, are available to the public
from the National Technical Information Service in Springfield, Virginia, upon request. The
information on file is provided on compact discs. In addition, individual respondent data are also
available on the FFIEC public web site at: http://www.ffiec.gov/nicpubweb/nicweb/nichome.aspx.
Legal Status
The Board’s Legal Division has determined that section 7(c)(2) of the IBA [12 U.S.C. §
3105(c)(2)] authorizes the agencies to require the FFIEC 002 and FFIEC 002S. In addition, section
4(b) of the IBA [12 U.S.C. § 3102(b)] authorizes the OCC to collect the information from Federal
branches and Federal agencies of foreign banks. Further, section 7(a) of the Federal Deposit
Insurance Act [12 U.S.C. § 1817(a)] authorizes the agencies to collect the information from insured
branches of foreign banks. The Board’s Legal Division has also determined that the individual
respondent information on the FFIEC 002 contained in Schedule M (Due from/Due to Related
Institutions in the U.S. and in Foreign Countries) and the FFIEC 002S is exempt from disclosure
pursuant to the Freedom of Information Act [5 U.S.C. § 552(b)(4)]. Information from all other
schedules of the FFIEC 002 is available to the public on request.
Consultation Outside the Agency
On January 15, 2008, the Board, under the auspices of the FFIEC and on behalf of the FDIC
and the OCC, published a notice in the Federal Register (73 FR 2491) requesting public comment
for 60 days on the extension, with revision, of the FFIEC 002 and the FFIEC 002S. The comment
period for this notice expired on March 17, 2008. The agencies received four comment letters from
13

a branch of a foreign bank, a federal agency, a bankers’ organization, and a foreign banking
organization. One commenter supported the proposed changes and described its use of the data to
analyze the effect of quarterly developments on the U.S. International Transactions Accounts. Two
commenters had no comments on the proposed revisions, but did offer comments on the use of
International Financial Reporting Standards in regulatory reports such as the FFIEC 002 and the
FFIEC 002S. The last commenter had no comments on the proposed revisions, but did suggest
delaying the proposed implementation date for some of these revisions. After considering these
comments, the FFIEC and the agencies have approved the revisions to the FFIEC 002 and the
FFIEC 002S as originally proposed. However, the agencies will implement the changes as of the
September 30, 2008, reporting date rather than the proposed June 30, 2008, reporting date with one
exception. The Schedule O changes will remain on the same interim transition period that had been
proposed, which covers the June 30, 2008, through December 31, 2008, reporting dates. On
April 4, 2008, the Board published a final notice in the Federal Register (73 FR 18531) for the
FFIEC 002 and FFIEC 002S.
Estimate of Respondent Burden
The FFIEC 002 is collected from the universe of U.S. branches and agencies of foreign
banks. As of June 30, 2007, the number of respondents is 264 and the current estimated annual
reporting burden is 24,024 hours. This proposal would add several new data items to the FFIEC 002
and revise certain existing data items. The proposal as a whole would produce a net increase in
reporting burden of two hours and fifteen minutes. The agencies estimate the total proposed annual
reporting burden to be 27,970 hours, an increase of 2,376 hours, as presented in the following table.
The FFIEC 002S is collected from all U.S. branches and agencies of foreign banks that manage or
control a non-U.S. branch. As of June 30, 2007, the number of respondents is 65 and the current
estimated annual reporting burden is 1,560 hours. The proposed total annual burden for the
FFIEC 002 and FFIEC 002S represents less than 1 percent of the total Federal Reserve System
burden.
Number of
respondents

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

Current
FFIEC 002
FFIEC 002S
Total

264
65

4
4

22.75
6

24,024
1,560
25,584

Proposed
FFIEC 002
FFIEC 002S
Total

264
65

4
4

25.00
6

26,400
1,560
27,960

Change

2,376

14

The total cost to the public is estimated to be $1,723,734.6
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The proposed annual cost to the Federal Reserve System for collecting and processing the
FFIEC 002 and the FFIEC 002S is estimated to be $221,900, an increase of less than 1 percent from
the current cost of $221,400. The one-time cost to implement the revisions to the FFIEC 002 is
estimated to be $8,700. The Federal Reserve System collects and processes the data for all three of
the agencies.

6

Total cost to the public was estimated using the following formula. Percent of staff time, multiplied by annual burden
hours, multiplied by hourly rate: 30% - Clerical @ $25, 45% - Managerial or Technical @ $55, 15% - Senior
Management @ $100, and 10% - Legal Counsel @ $144. Hourly rate estimates for each occupational group are averages
using data from the Bureau of Labor and Statistics, Occupational Employment and Wages, news release.

15