FFIEC019_200908_omb

Supporting Statement for the
Country Exposure Report for U.S. Branches and Agencies of Foreign Banks
(FFIEC 019; OMB No. 7100-0213)
Summary
The Board of Governors of the Federal Reserve System (Board) requests approval from the
Office of Management and Budget (OMB) to extend, without revision, the Federal Financial
Institutions Examination Council (FFIEC) Country Exposure Report for U.S. Branches and
Agencies of Foreign Banks (FFIEC 019; OMB No. 7100-0213). 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 report is
required and must be submitted quarterly by all individual U.S. branches and agencies of foreign
banks that have more than $30 million in direct claims on residents of foreign countries. Each
reporting branch or agency provides information for supervisory purposes on its direct and indirect
claims, total adjusted claims on foreign residents, and information on commitments. The current
annual burden for the FFIEC 019 is estimated to be 6,440 hours.
Background and Justification
The FFIEC implemented the FFIEC 019 report in June 1986 in response to supervisory
concerns relating to funding practices of certain U.S. branches and agencies of foreign banks that
were raising funds in the United States and other nations’ interbank markets and lending the bulk of
the funds to home-country residents. Major funding problems emerged for these U.S. offices when
the governments of the home countries of the parent banks encountered severe difficulties in
servicing their external debt. In 1985 the Board, the FDIC, and the OCC proposed collection of
country exposure information from U.S. branches and agencies in order to supervise their operations
more effectively. The FFIEC 019 is an important and unique tool for surveillance and oversight that
collects the minimal amount of information needed for supervisory purposes.
Oversight of the liquidity positions of all banking offices in the United States is the primary
responsibility of the three federal bank supervisory agencies under the Basle Concordat, which is an
understanding among bank regulators of several countries relating to mutual supervision of banks
operating in international markets. Quarterly information on significant country risk exposures is
very important in measuring and supervising liquidity positions of the branches and agencies of
foreign banks, which fund themselves primarily in the U.S. domestic money markets by taking large
uninsured deposits from banks, corporations, and individuals. Those branches that are insured by
the FDIC also raise funds from retail customers. The financial regulatory agencies need to be able to
assess the institutions’ ability to repay these deposits, which is jeopardized in branches that have an
excessive volume of poor quality or slow paying assets.
One important indicator of potential underlying problems is an excessive concentration by
the U.S. branch or agency in assets due from a single country or a small number of countries.
Therefore, the regulatory agencies need to be able to make informed judgments regarding the level
of country concentrations within a specific branch or agency, to ensure that these institutions, like
domestic banking institutions, are practicing reasonable country risk diversification. The FFIEC 019

assists the agencies in monitoring the extent to which the U.S. branches and agencies are pursuing
prudent diversification policies and limiting potential liquidity pressures.
In addition, FDIC-insured branches of foreign banks are subject to an asset maintenance
requirement (12 CFR 347.210). Under this requirement, in general, an insured branch must maintain
on a daily basis eligible assets in an amount not less than 106 percent of the preceding quarter’s
average book value of the branch’s liabilities, exclusive of liabilities due to related offices of the
foreign bank. The FDIC may require that a higher ratio of eligible assets be maintained if the
financial condition of the insured branch warrants such action. Among the factors that the FDIC
considers in requiring a higher ratio is the concentration of transfer risk to any one country,
including the country in which the foreign branch’s head office is located. The data from the
FFIEC 019 report assist the FDIC in evaluating the existence of such concentrations and determining
whether to require that an insured branch maintain a higher ratio of eligible assets than the 106
percent minimum.
In order to limit reporting burden, the FFIEC 019 has been designed to collect the minimum
amount of information needed to assess country exposure. The report requires each of the U.S.
branches and agencies with claims on foreign parties exceeding $30 million to report (1) its exposure
to borrowers in its home country and (2) each of the next five largest country exposures, provided
the exposure exceeds $20 million. These requirements are considerably less burdensome than the
information required of domestic banking institutions on the FFIEC 009 Country Exposure Report
(OMB No. 7100-0035), which requires information on all country exposures and requires
considerably greater maturity detail. Because smaller institutions are often more likely to encounter
funding problems than larger ones, the regulatory agencies do not believe that it is appropriate to
increase the minimum exposure level that must be reported.
Description of Information Collection
The FFIEC 019 report must be filed by each U.S. branch or agency of a foreign bank that has
more than $30 million in total direct claims on foreign residents. The branch or agency reports its
total exposure (1) to residents of its home country and (2) to the other five foreign nations to which
its exposure is largest and is at least $20 million. The home country exposure must be reported
regardless of the size of the total claims for that nation.
Each reporting branch or agency must report, by country as appropriate, the information on
its direct claims (assets such as deposit balances, loans, or securities), indirect claims (which include
guarantees), and total adjusted claims on foreign residents, as well as information on commitments.
The respondent also must report information on claims on related non-U.S. offices that are included
in total adjusted claims on the home country, as well as a breakdown, for the home country and each
other reported country, of adjusted claims on unrelated foreign residents by the sector of borrower or
guarantor, and by maturity (in two categories: one year or less, and over one year). The regulatory
agencies are proposing no changes to the FFIEC 019.

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Time Schedule for Information Collection
The FFIEC 019 is filed quarterly as of the last business day of March, June, September and
December. Each reporting branch or agency must file its report with the appropriate Reserve Bank
within 45 days of the report date. Because the information contained in the reports is confidential,
the information is not published.
Legal Status
The Board’s Legal Division has determined that 12 U.S.C. §§ 3105 and 3108 authorizes the
Board to require the report. The report is also authorized by sections 7 and 10 of the Federal Deposit
Insurance Act (12 U.S.C. §§ 1817 and 1820) for the FDIC and the National Bank Act (12 U.S.C. §
161) for the OCC. Individual respondent data are regarded as confidential under the Freedom of
Information Act (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
On May 27, 2009, the Board, under the auspices of the FFIEC and on behalf of the FDIC and
the OCC, published a notice in the Federal Register (74 FR 25240) requesting public comment for
60 days on the extension, without revision, of the FFIEC 019. The comment period for this notice
expired on July 27, 2009. The agencies did not receive any comments. On August 12, 2009, the
Board published a final notice in the Federal Register (74 FR 40595) for the FFIEC 019.
Estimate of Respondent Burden
The FFIEC 019 respondent panel comprises 161 U.S. branches and agencies of foreign
banks. The current annual burden is estimated to be 6,440 hours. The total burden represents less
than 1 percent of the total Federal Reserve System burden.

FFIEC 019

Number of
respondents

Annual
frequency

Estimated
average hours
per response

161

4

10

Estimated
annual burden
hours
6,440

The total cost to the public is estimated to be $397,026.1

1

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% Administrative or Junior Analyst @ $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 (BLS), Occupational Employment and Wages 2007,
www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational Classification System,
www.bls.gov/soc/.

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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 annual cost to the Federal Reserve System for collecting and processing the FFIEC 019
reports is estimated to be $160,000. The Federal Reserve System collects and processes the data for
all three of the federal bank regulatory agencies.

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