FFIEC019_20150902_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 6,680 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 C.F.R. 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 sections 7 and 13 of the International
Banking Act (12 U.S.C. §§ 3105 and 3108) authorize 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 6, 2015, the Board, under the auspices of the FFIEC and on behalf of the FDIC
and the OCC, published a notice in the Federal Register (80 FR 26050) requesting public
comment for 60 days on the extension, without revision, of the FFIEC 019. The comment period
for this notice expired on July 6, 2015. The agencies did not receive any comments on the
FFIEC 019. On August 18, 2015, the Board published a final 30 day notice in the Federal
Register (80 FR 49999). The comment period for this notice expires on September 17, 2015.
Estimate of Respondent Burden
The FFIEC 019 respondent panel comprises 167 U.S. branches and agencies of foreign
banks. The current annual burden is estimated to be 6,680 hours. The total burden represents
less than 1 percent of the total Federal Reserve System burden.

FFIEC 019

Number of
respondents1

Annual
frequency

Estimated
average hours
per response

167

4

10

1

Estimated
annual burden
hours
6,680

Of these respondents, 38 are small entities as defined by the Small Business Administration (i.e., entities with less
than $550 million in total assets).

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The total cost to the public is estimated to be $345,690.2
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 $25,300. The Federal Reserve System collects and
processes the data for all three of the federal bank regulatory agencies.

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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 $17, 45% Financial Managers at
$63, 15% Lawyers at $64, and 10% Chief Executives at $87). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2014, published March 25, 2015, www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined using
the BLS Occupational Classification System, www.bls.gov/soc/.

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