FR4010_FR4011_FR4012_FR4017_FR4019_FR4023_20170130_omb

Supporting Statement for the
Filings Related to the Gramm-Leach-Bliley Act
(OMB No. 7100-0292)
Summary
The Board of Governors of the Federal Reserve System (Board), under delegated
authority from the Office of Management and Budget (OMB), proposes to extend for three years,
without revision, the Filings Related to the Gramm-Leach-Bliley Act (OMB No. 7100-0292).
This family of reporting and recordkeeping requirements related to amendments made by the
Gramm-Leach-Bliley Act (GLB Act), to the Bank Holding Company Act (BHC Act), the
Federal Reserve Act (FRA), and related regulations is currently composed of the following:
 The Declarations to Become a Financial Holding Company (FHC) (FR 4010);1
 The Requests for Determinations and Interpretations Regarding Activities Financial in
Nature (FR 4011);
 The Notices of Failure to Meet Capital or Management Requirements (FR 4012);2
 The Notices by State Member Banks to Invest in Financial Subsidiaries (FR 4017);
 The Regulatory Relief Requests Associated with Merchant Banking Activities (FR 4019);
and
 The Recordkeeping Requirements Associated with Merchant Banking Activities
(FR 4023).
These collections of information are event-generated and as such, there are no formal
reporting forms associated with them. In each case, the type of information required to be filed
is described in the Board’s regulations. The Board estimates the total annual burden for the six
collections of information to be 1,799 hours.
Background and Justification
President Clinton signed the GLB Act into law on November 12, 1999. Final regulations
implementing the GLB Act and mandating the subject information collections took effect in
2001. These data collections include:
1. Declarations to Become a Financial Holding Company (FR 4010). The BHC Act
requires entities to file this declaration in order to be treated as FHCs.3 The information
contained in an FHC declaration is used by the Board to ascertain whether the filer is
eligible to become an FHC.
2. Requests for Determinations and Interpretations Regarding Activities Financial in
Nature (FR 4011). The GLB Act authorizes the Board, upon request or on its own
1

Savings and Loan Holding Companies (SLHCs) were added to the FR 4010 as a result of Regulation LL (12 CFR
238.65). See 76 FR 56508, September 13, 2011.
2
SLHCs were added to the FR 4012 as a result of Regulation LL (12 CFR 238.65). See 76 FR 56508, September
13, 2011.
3
See 12 U.S.C. § 1843(l)(1)(D). Section 10(c)(2)(H) of the Home Owner’s Loan Act (12 U.S.C. § 1467a(c)(2)(H))
and section 8(a) of the International Banking Act (12 U.S.C. § 3106(a)), respectively, make this requirement
applicable to SLHCs and Foreign Banking Organizations (FBOs) seeking to be treated as FHCs.

3.

4.

5.

6.

initiative, to determine in conjunction with the Treasury Department that nonbanking
activities are financial in nature, incidental to a financial activity, or complementary to a
financial activity.4 In addition, the Board’s Regulation Y permits interested parties to
request the Board to issue advisory opinions that specific proposed activities fall within
the scope of (or are incidental to) financial activities.5 To gather facts necessary to make
determinations or issue opinions, the Board must collect information from parties making
such requests.
Notices of Failure to Meet Capital or Management Requirements (FR 4012). The BHC
Act provides that a company is eligible for FHC status only if it and all of its subsidiary
depository institutions (and in the case of a Foreign Banking Organizations (FBOs), the
foreign bank itself, and its U.S. branches, agencies, and commercial lending companies)
are well managed and well capitalized. The Board’s Regulations Y and LL require an
FHC that falls out of compliance with these requirements to notify the Board of the
noncompliance.6 Notice of noncompliance triggers restrictions on the FHC’s ability to
engage in additional nonbanking activities and commences a 45-day period for the FHC
to submit plans to the Board for curing the deficiencies and to execute a formal cure
agreement with the Board.7
Notices by State Member Banks to Invest in Financial Subsidiaries (FR 4017). The FRA
and the Board’s Regulation H require state member banks to obtain approval from the
Board prior to establishing, acquiring control of, or acquiring an interest in a financial
subsidiary, and prior to engaging in additional financial activities through an existing
financial subsidiary.8 The information contained in the notice is used by the Board to
ascertain whether the filer is eligible to establish a financial subsidiary.
Regulatory Relief Requests Associated with Merchant Banking Activities (FR 4019).
Regulation Y generally limits holding periods for merchant banking investments to 10
years (15 years in the case of investments in or through private equity funds), but permits
an FHC to request holding period extensions on a case-by-case basis.9 Information
contained in the request is used to determine whether the request should be granted. The
BHC Act also bars FHCs from routinely managing or operating portfolio companies held
as merchant banking investments, except as necessary or required to obtain a reasonable
return on investment. To help monitor compliance with this limitation, Regulation Y
requires an FHC to notify the Board if the FHC’s routine management or operation of a
portfolio company lasts longer than nine months.10 Information in the notice enables the
Board to monitor compliance with requirements for engaging in merchant banking
activities.
Recordkeeping Requirements Associated with Merchant Banking Activities (FR 4023).
Regulation Y requires companies engaging in merchant banking activities to establish
and maintain policies, procedures, records, and systems for managing the activities and
the risk associated with them and to make these materials available upon request to the

4

See 12 U.S.C. § 1843(k)(1).
See 12 CFR 225.88(e).
6
See 12 U.S.C. § 1843(l)(1); 12 CFR 225.83(b)(1), 225.93(b)(1), and 238.66(b).
7
See 12 U.S.C. §§ 1843(m)(2) and 1467a(c)(2)(H)(ii), 12 CFR 225.83(d) and 225.93(d).
8
See 12 U.S.C. § 335 (applying the prior approval requirements of 12 U.S.C. § 24a(a)(2)(F)); 12 CFR 208.76(a).
9
See 12 CFR 225.172(b), 225.173(c); 12 CFR 225.172(b)(4), and 225.173(c)(2).
10
See 12 CFR 225.171, 225.171(e)(3).
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Board.11 Regulation Y also requires FHCs to document any routine management or
operation of a portfolio company and to make this documentation available to the Board
on request.12 Examiners use this information to assess whether the FHC is conducting its
merchant banking activities in a safe and sound manner and whether the FHC is in
compliance with applicable regulatory requirements for engaging in merchant banking
activities.
Description of Information Collection
FR 4010
The BHC Act, and Regulations Y and LL specify the information to be included in a
declaration.13 In most cases, FHC declarations are filed in the form of a letter addressed to the
appropriate Federal Reserve Bank. An FHC declaration filed by a U.S. BHC must state that the
BHC elects to become an FHC, must be signed by an authorized official or representative, and
must provide the following information:
 the name and head office address of the BHC and of each depository institution
controlled by the BHC (multi-tiered filers may file a single declaration, provided the
name and head office address of each tiered company is listed.),
 a certification that the BHC and all depository institutions controlled by the BHC are well
capitalized and well managed as of the declaration date, and
 the capital ratios (as of the close of the previous quarter for all relevant capital measures)
for each depository institution the BHC controls.
An FHC declaration filed by a U.S. Savings and Loan Holding Companies (SLHCs) must
state that the SLHC elects to be treated as an FHC, must be signed by an authorized official or
representative, and must provide the following information:
 the name and head office address of the SLHC and of each depository institution
controlled by the SLHC (multi-tiered filers may file a single declaration, provided the
name and head office address of each tiered company is listed.),
 a certification that the SLHC and all depository institutions controlled by the SLHC are
well capitalized and well managed as of the declaration date, and
 the capital ratios (as of the close of the previous quarter for all relevant capital measures)
for each depository institution the SLHC controls.
An FHC declaration filed by an FBO must state that the FBO elects to be treated as an
FHC, must be signed by an authorized official or representative, and must provide the following
information:
 with respect to each foreign bank controlled by the FBO, the bank’s risk-based capital
ratios, amount of tier 1 capital, and total assets, as of the close of the most recent quarter
and as of the close of the most recent audited reporting period,

11
12
13

See 12 CFR 225.175.
See 12 CFR 225.171(e)(4).
See 12 U.S.C. § 1843(l)(1); 12 CFR 225.82, 238.65(b) and 225.91. [Put in order of presentation]

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a certification that each foreign bank controlled by the FBO is well-capitalized and wellmanaged,
a certification that all U.S. depository institutions controlled by the FBO are well
capitalized and well managed as of the declaration date, and
the capital ratios (as of the close of the previous quarter for all relevant capital measures)
for each U.S. depository institution controlled by the FBO
FR 4011

Regulation Y specifies the information to be collected in connection with each type of
request.14 A request for a determination that an activity is financial in nature or incidental to a
financial activity must be in writing and:
 identify, define, and describe the activity and explain how the activity would be
conducted,
 explain why the activity should be considered financial in nature or incidental to a
financial activity, and
 include information supporting the request and any other information required by the
Board.
A request for an advisory opinion that a specific activity is within the scope of activities
previously determined to be financial in nature, or incidental to a financial activity, must be in
writing and:
 identify and describe the proposed activity or the proposed product or service,
 offer support for the desired interpretation, and
 include any other information requested by the Board.
An applicant seeking prior approval to engage in an activity that the applicant believes is
complementary to a financial activity must submit a written request that:
 identifies, defines, and describes the activity and explains how the activity would be
conducted,
 identifies the financial activity to which the proposed activity would be complementary
and provides information sufficient to support a finding that the proposed activity is
complementary to the financial activity,
 describes the scope and relative size of the proposed activity, measured by the percentage
of the FHC’s projected revenues expected to be derived from, and assets associated with,
the activity,
 discusses the risks the activity may reasonably be expected to pose to the safety and
soundness of the FHC’s depository institutions and to the financial system generally,
 describes the potential adverse effects, including potential conflicts of interest, decreased
or unfair competition, or other risks, that the activity could cause, and the measures the
FHC proposes to take to address those potential effects,

14

See 12 CFR 225.88(b) and (e), and 225.89.

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describes the potential benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, the proposal may be reasonably expected to produce,
and
provides information about the FHC’s financial and managerial resources and any other
information requested by the Board.
FR 4012

Regulation Y provides that the notice must identify the noncompliant banking entity and
the area of noncompliance. Regulation Y does not prescribe a format for such notices, however,
they typically take the form of a letter.15 Plans submitted to remediate capital and management
deficiencies typically include the following:
 an explanation of the specific actions the FHC will take to correct all areas of
noncompliance,
 a schedule within which each action will be taken, and
 any other information the Board may require.
FR 4017
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Regulation H requires these notices to be in the form of a letter with enclosures and:16
describe the proposed transaction by which the bank would acquire the stake in the
financial subsidiary,
provide the name and head office address of the subsidiary,
describe each current and proposed activity of the financial subsidiary and the legal
authority for each activity,
provide the capital ratios, as of the end of the most recent calendar quarter, for the bank
and each of its depository institution affiliates,
certify that the bank and each of its depository institution affiliates were well-capitalized
at the close of the previous calendar quarter and as of the notice date;
certify that the bank and each of its depository institution affiliates are well-managed as
of the notice date,
certify that the bank meets any applicable debt rating or alternative requirements and
complies both before and after the transaction with the limit on the aggregate amount of
assets held by the bank’s financial subsidiaries, and
describe the insurance activities, if the financial subsidiary will engage in insurance
activities, to be conducted and identify each state in which the company holds an
insurance license and the state insurance authority that issued the license.
FR 4019

Regulation Y requires requests for extension of the holding period for a merchant bank
investment to include the following information:17
15
16
17

See 12 CFR 225.83(b)(1), 225.93(b)(1) and 238.66(b).
See 12 CFR 208.76.
See 12 CFR 225.172(b)(4).

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the reasons for the request, including information addressing the factors the Board must
consider in acting on such a request (including the costs and risks to the FHC of
disposing of the investment, market conditions, the extent and history of the FHC’s
involvement in managing or operating the portfolio company, and the FHC’s average
holding period for its merchant banking investments) and
an explanation of the FHC’s plan for divesting the investment.

A notice of extended routine management or operation of a portfolio company can be in
the form of a brief letter and must identify the portfolio company, the date on which the FHC
first became involved in the routine management or operation of the portfolio company, the
reasons for the FHC’s involvement, the actions taken by the FHC to address the circumstances
giving rise to its involvement, and an estimate of when the FHC anticipates ceasing routinely
managing or operating the portfolio company.
FR 4023
The general policies and procedures that an FHC must establish with respect to merchant
banking must be reasonably designed to:18
 monitor, with respect to each investment and the entire portfolio, carrying and market
values and performance,
 identify and manage market, credit, and other risks of such investments,
 identify and monitor terms and risks of transactions of companies in which the FHC has
merchant banking investments,
 ensure the corporate separateness of the FHC and the companies in which it has merchant
banking investments, and
 ensure compliance with sections 23A and 23B of the FRA, anti-tying statutes,
Regulation Y, and any other applicable provisions of law.
Time Schedule for Information Collection
All references to time schedules are in calendar days.
FR 401019
Under Regulations Y and LL, a company’s election to be treated as an FHC is effective
on the 31st day after the declaration is received, unless the Board notifies the company before
that date that the election is ineffective because the filer does not meet the eligibility criteria to
become an FHC. Alternatively, the Board may make an FHC election effective prior to the 31st
day by notifying the filer in writing. In cases in which a company files a declaration in tandem
with an application to become a BHC or an SLHC, an election typically becomes effective at the
time the company becomes a BHC or an SLHC. For records management purposes, FHC
declarations are treated in the same manner as other banking applications. An FBO may file an
FHC election under a preclearance process, and in certain instances must use the preclearance
18
19

See 12 CFR 225.175(a)(1).
See 12 CFR 225.82(e) and (f), 225.92(a) and (b) and 238.65(c), (e), and (f).

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process.20
FR 4011
The information submitted in connection with the FR 4011 is event generated and the
data are not part of any published reporting series. All timeframes are generally dependent upon
when the filer chooses to request a determination or interpretation. The filing may be processed
under various schedules and final action typically would be taken by the Board.
The GLB Act requires the Board to notify the Department of the Treasury about any
request for a determination that an activity is financial in nature or incidental to a financial
activity and bars the Board from making a favorable determination on such a request if Treasury
advises the Board in writing within 30 days that Treasury believes the proposed activity is not
financial in nature or incidental to financial activities.21 The Board’s review of such a request
often causes a request for additional information from the filer about the precise nature of the
activity, the way in which it would be conducted, and the risks posed by the activity, among
other matters. The Board may (and typically does) publish a description of a request in the
Federal Register and request public comment.22 Under Regulation Y, the Board strives to make
decisions on requests not more than 60 days after the consultative process and the public
comment period have ended.23
The Board is not required to consult with Treasury about requests for advisory opinions
regarding whether particular proposed activities would be within the scope of activities
previously determined to be financial in nature or incidental to financial activities. The Board
will often request additional information from a filer and typically will not deem a request to be
complete until the filer has provided the requested additional information. Under Regulation Y,
the Board is to provide an advisory opinion within 45 days of receiving a complete written
request.24
The Board also typically needs to seek additional information from filers of requests for
approval to engage in activities complementary to financial activities, and such a notice is not
deemed complete until the Board receives the requested information. No consultation with
Treasury is required, but the Board typically will publish a description of the request in the
Federal Register and request public comment. Under the GLB Act, a notice seeking to engage
in complementary activities is deemed approved 60 days after the date the notice is complete,
though the Board may extend the period an additional 30 days.25
FR 4012
An FHC must file this notice within 15 days of becoming aware of failure to meet capital
20
21
22
23
24
25

See 12 CFR 225.91(c).
See 12 U.S.C. § 1843(k)(2)(A).
See 12 CFR 225.88(c)(2).
See 12 CFR 225.88(d).
See 12 CFR 225.88(e)(2).
See 12 U.S.C. § 1843(j)(1)(C).

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or management requirements,26 and then has 45 days to reach agreement with the Board on a
plan to cure the deficiencies.27 If deficiencies are not cured within 180 days of the notice, the
Board is empowered to order the FHC to divest its banking companies or to cease engaging in all
nonbanking activities apart from those authorized for BHCs prior to the enactment of the GLB
Act.28 However, the Board also may grant extensions of this cure period.
FR 4017
Under Regulation H, a notice to invest in financial subsidiaries is deemed approved 15
days after it is received, unless the Board notifies the filer prior to that date that the notice will
require additional review or that the bank does not meet the requirements to hold a stake in a
financial subsidiary.29
FR 4019
A request for an extension of a merchant banking investment holding period must be
submitted at least 90 days prior to expiration of the holding period.30 As noted, Regulation Y
requires the Board to weigh certain factors in considering a holding period extension request.31
The notice of extended routine management or operation must be filed prior to the date that is
nine months after the FHC commenced routinely managing or operating the portfolio company. 32
FR 4023
Companies required to establish and maintain policies, procedures, records, and systems
for managing the activities and the risk associated with merchant banking activities must make
these materials available upon request to the Board.
Legal Status
The Board’s Legal Division has determined that these collections of information are
authorized pursuant to the following statutes and regulations:

26
27
28
29
30
31
32

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FR 4010 is authorized by section 4(l)(1)(C) of the BHC Act (12 U.S.C. § 1843 (l)(1)(C)),
section 10(c)(2)(H) of the Home Owners’ Loan Act (12 U.S.C. 1467a(c)(2)(H)), section
8(a) of the International Banking Act (12 U.S.C. § 3106(a)), sections 225.82 and 225.91
of the Board’s Regulation Y (12 CFR §§ 225.82, 225.91), and section 238.65 of the
Board’s Regulation LL (12 CFR § 238.65).

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FR 4011 is authorized by section 4(j) and (k) of the BHC Act (12 U.S.C. § 1843(j)-(k))
and sections 225.88 and 225.89 of the Board’s Regulation Y (12 CFR §§ 225.88, 225.89).

See 12 CFR 225.83(b)(1) and 238.66(d).
See 12 U.S.C. §§ 1843(m)(2) and 1467a(c)(2)(H)(ii).
See 12 U.S.C. § 1843(m)(4).
See 12 CFR 208.76(d).
See 12 CFR 225.172(b)(4).
See 12 CFR 225.172(b)(5).
See 12 CFR 225.171(e)(3).

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FR 4012 is authorized by section 4(l)(1) and 4(m) of the BHC Act (12 U.S.C. §
1843(l)(1), (m)), section 10(c)(2)(H) of the Home Owners’ Loan Act (12 U.S.C.
1467a(c)(2)(H)), section 8(a) of the International Banking Act (12 U.S.C. § 3106(a)),
sections 225.83 and 225.93 of the Board’s Regulation Y (12 CFR §§ 225.83, 225.93), and
section 238.66(b) of the Board’s Regulation LL (12 CFR § 238.66(b)).

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FR 4017 is authorized by section 9 of the FRA (12 U.S.C. § 335) and section 208.76 of
the Board’s Regulation H (12 CFR § 208.76).



FR 4019 is authorized by section 4(k)(7) of the BHC Act (12 U.S.C. § 1843(k)(7)),
sections 225.171(e)(3), 225.172(b)(4), and 225.173(c)(2) of the Board’s Regulation Y
(12 CFR §§ 225.171(e)(3), 225.172(b)(4), 225.173(c)(2)).

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FR 4023 is authorized by section 4(k)(7) of the BHC Act (12 U.S.C. § 1843(k)(7)) and
sections 225.171(e)(4) and 225.175 of the Board’s Regulation Y (12 CFR §§
225.171(e)(4), 225.175).

The obligation to respond to the FR 4011 is voluntary (for requests to determine that an
activity is financial in nature or to issue an advisory opinion that an activity is within the scope of
an activity previously determined to be financial in nature) and required to obtain or retain
benefits (for approvals to engage in an activity that is complementary to a financial activity).
The obligation to respond to the FR 4010, FR 4017, and FR 4019 is required to obtain or retain
benefits. The obligation to respond to FR 4012 and the obligation to comply with the
recordkeeping requirements of the FR 4023 is mandatory.
The information collected on the FR 4010, FR 4011, FR 4017, and FR 4019 and
information related to a failure to meet capital requirements on the FR 4012 is not generally
considered confidential. Nevertheless, a respondent may request confidential treatment of
information contained in these information collections in accordance with section (b)(4) or (b)(6)
of the Freedom of Information Act (FOIA) (5 U.S.C. § 552(b)(4), (b)(6)). Any request for
confidential treatment of information must be accompanied by a detailed justification for
confidentiality. Information related to a failure to meet management requirements on the
FR 4012 is considered confidential and exempt from disclosure under section (b)(4), because the
release of this information would cause substantial harm to the competitive position of the entity,
and section (b)(8), if the information is related to examination, operating, or condition reports
prepared by, on behalf of, or for the use of an agency responsible for the regulation or
supervision of financial institutions (5 U.S.C. § 552(b)(4), (b)(8)).
Consultation Outside the Agency
On October 18, 2016, the Board published a notice in the Federal Register
(81 FR 71730) requesting public comment for 60 days on the extension, without revision, of the
Filings Related to the Gramm-Leach-Bliley Act. The comment period for this notice expired on
December 19, 2016. The Board did not receive any comments. On January 17, 2017, the Board
published a final notice in the Federal Register (82 FR 4880).

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Estimated of Respondent Burden
The Board estimates the total annual burden for the six collections of information to be
1,799 hours, as shown in the table below. For each collection of information, the burden
estimate is based on the amount of time needed to review filing requirements, collect the
necessary information, format and transmit the filing, and respond to requests from the Board for
additional information. The estimated number of respondents for each collection of information
was determined using the average of the total number of respondents from previous years. These
reporting and recordkeeping requirements represent less than 1 percent of total Federal Reserve
System paperwork burden.
Number of
respondents33
FR 4010
BHCs and SLHCs
Foreign Banks

Estimated
Annual
average hours
frequency
per response

Estimated
annual burden
hours

31
1

1
1

3
3.5

93
4

FR 4011

5

1

10

50

FR 4012
BHCs and SLHCs decertified
as an FHC
FHCs back into compliance –
BHCs and SLHCs

2

1

1

2

14

1

10

140

1

1

4

4

4

1

1

4

2

1

1

2

30

1

50

1,500

FR 4017
FR 4019
Regulatory relief requests
Portfolio company
notification
FR 4023
Total

1,799

The total annual cost to the public for this information collection is estimated to be $95,617.34
33

Of these respondents, 14 are considered small entities as defined by the Small Business Administration (i.e.,
entities with less than $550 million in total assets) www.sba.gov/contracting/getting-started-contractor/make-sureyou-meet-sba-size-standards/table-small-business-size-standards.
34
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
$65, 15% Lawyers at $66, and 10% Chief Executives at $89). 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 2015, published March 30, 2016 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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Sensitive Questions
This collection of information contain no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The information to be submitted is not automated. The Federal Reserve System’s costs
for processing this information are minimal. The Board believes that most of the information for
the filings (FHC elections, financial subsidiary filings, requests for determinations and
interpretations, requests for holding period extensions) are submitted via e-mail or in hard-copy
form to the Board although there are systems available to submit directly via Electronic
Applications (EApps).

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