FR_K2_201412_omb

Supporting Statement for the
International Applications and Prior Notifications Under Subpart B of Regulation K
(FR K-2; OMB No. 7100-0284)
Summary
The Board of Governors of the Federal Reserve System, under delegated authority from
the Office of Management and Budget (OMB), proposes to extend for three years, without
revision, the International Applications and Prior Notifications Under Subpart B of Regulation K
(FR K-2; OMB No. 7100-0284). Foreign banks are required to obtain the prior approval of the
Federal Reserve to establish a branch, agency, or representative office; to acquire ownership or
control of a commercial lending company in the United States; or to change the status of any
existing office in the United States. The Federal Reserve uses the information, in part, to fulfill its
statutory obligation to supervise foreign banking organizations with offices in the United States.
The FR K-2 reporting form consists of a cover sheet and the following five attachments
for the application and notification requirements embodied in Subpart B of Regulation K:
Attachment A – Information Requested in Connection with Applications by Foreign Banks to
Establish Branches, Agencies, or Commercial Lending Companies in the United
States (section 211.24(a)(1) of Regulation K)
Attachment B – Information Requested in Connection with Applications by Foreign Banks to
Establish Representative Offices in the United States (section 211.24(a)(1) of
Regulation K)
Attachment C – Information Requested in Connection with Notifications by Foreign Banks to
Establish Branches, Agencies, or Commercial Lending Companies in the United
States (section 211.24(a)(2)(i)(A) of Regulation K)
Attachment D – Information Requested in Connection with Notifications by Foreign Banks to
Establish Representative Offices in the United States (section
211.24(a)(2)(i)(B)(1) – (3) of Regulation K)
Attachment E – Commitments Required in Connection with Applications and Notifications by
Foreign Banks to Establish Branches, Agencies, Commercial Lending
Companies, or Representative Offices in the United States.
The total annual reporting burden is estimated to be 490 hours.
Background and Justification
The Foreign Bank Supervision Enhancement Act of 1991 (FBSEA), Subtitle A of Title II
of the Federal Deposit Insurance Corporation Improvement Act of 1991, expanded the authority
given to the Federal Reserve under the International Banking Act of 1978 (IBA). The FBSEA
provided the Federal Reserve with new authority to approve the establishment of U.S. offices by
foreign banks and to regulate and supervise the U.S. operations of foreign banks. The Federal
Reserve modified Regulation K in 1993 to incorporate these statutory changes. 1 Regulation K
was revised again in November 2001.

1

58 Federal Register 6348 (January 28, 1993)

Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996, the
Federal Reserve may approve an application to establish a branch or agency subject to certain
conditions even if the Federal Reserve is unable to find that the foreign bank is subject to
comprehensive consolidated supervision. Specifically, the Federal Reserve may approve an
application by such foreign bank if: (i) the appropriate authorities in the home country of such
foreign bank are working to establish arrangements for the consolidated supervision of such
bank; and (ii) all other factors are consistent with approval. 2
Prior to the 2002 revisions, the FR K-2 application requirements were contained in a
directive to Reserve Bank staff dated March 5, 1992 (SR 92-6). The revisions consisted of
implementing a reporting form with filing instructions in addition to the informational
requirements contained in SR 92-6. The reporting form clarified and streamlined the information
required in international applications and prior notifications and reduced the need for repeated
requests for additional information after the application or notification has been filed.
Description of Information Collection
In order to approve an application by a foreign banking organization to open a branch,
agency, or commercial lending company in the United States, the Federal Reserve generally
seeks to determine that the foreign bank is subject to comprehensive supervision or regulation on
a consolidated basis by the appropriate authorities in its home country. In evaluating an
application to establish a representative office, the Federal Reserve takes into account the
standards that apply to the establishment of branches and agencies, but a finding of
comprehensive consolidated supervision is not required. The applicant foreign bank also must
provide a complete organization chart, financial information, and information regarding certain
of the bank’s senior officers, major shareholders, and proposed management of the U.S. office.
With regard to the proposed U.S. office, the applicant foreign bank must describe the
types of business to be conducted and the types of services to be offered. Further, the applicant
and its ultimate parent(s) must provide adequate assurances that the Federal Reserve will have
access to such information as the Federal Reserve deems necessary for it to determine and
enforce compliance with applicable U.S. law. The applicant must describe any secrecy laws or
other impediments that would restrict the ability of the applicant and its ultimate parent(s) to
provide information to the Federal Reserve as needed.
Time Schedule for Information Collection
The applying or notifying organization submits the FR K-2 information collection in
accordance with the application and notification requirements embodied in Subpart B of
Regulation K to the Federal Reserve Bank with supervisory responsibility for that banking
2

In deciding whether to approve an application under this lesser standard, the Federal Reserve also considers
whether the foreign bank has adopted and implemented procedures to combat money laundering and shall take into
account whether the home country supervisor is developing a legal regime to address money laundering.

2

organization. 3 Upon receipt of an application or notification, the Federal Reserve reviews the
submission for completeness. The Federal Reserve is required to act on applications to establish
a branch or agency within 180 days of receipt of the application unless such period is extended
by an additional 180 days. Information from the FR K-2 is not published.
Legal Status
The Board's Legal Division has determined that this collection of information is
mandatory pursuant to sections 7, 10, and 13 of the International Banking Act (12 §§ U.S.C.
3105, 3107, 3108). These statutory provisions are implemented by Subpart B of the Federal
Reserve’s Regulation K. (12 C.F.R. Part 211, subpart B). The applying or notifying
organization may request that portions of the information contained in the FR K-2 be afforded
confidential treatment. To do so, applicants must demonstrate how the information for which
confidentiality is requested would fall within the scope of one or more of the exemptions
contained in the Freedom of Information Act. Any such request would have to be evaluated on a
case-by-case basis.
Consultation Outside the Agency
On September 24, 2014, the Federal Reserve published a notice in the Federal Register
(79 FR 57101) requesting public comment for 60 days on the extension, without revision, of the
International Applications and Prior Notifications Under Subpart B of Regulation K. The
comment period for this notice expired on November 24, 2014. The Federal Reserve did not
receive any comments. On December 15, 2014, the Federal Reserve published a final notice in
the Federal Register (79 FR 74088).
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Respondent Burden
The current annual reporting burden for Subpart B requirements of Regulation K is
estimated to be 490 hours as shown in the following table. The current burden estimate is based
on the number of responses received during a typical year. The reporting requirement of these
applications and notifications represent less than 1 percent of total Federal Reserve System
paperwork burden for all reports.

3

If the foreign banking organization does not currently operate in the United States, the application is submitted to
the Federal Reserve Bank in whose district the proposed office will be located.

3

FR K-2

Average
number of
respondents
14

Annual
frequency

Estimated
average hours
per response

Estimated
annual
burden hours

1

35

490

The total annual cost to the public for this application is estimated to be $24,941. 4
Estimate of Cost to the Federal Reserve System
The cost to the Federal Reserve System of printing, mailing, and processing the FR K-2
is negligible.

4

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $18, 45% Financial Managers at
$61, 15% Lawyers at $63, and 10% Chief Executives at $86). Hourly rate for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
2013, www.bls.gov/news.release/ocwage.nr0.htm. Occupations are defined using the BLS Occupational
Classification System, www.bls.gov/soc/

4