FRK2_20180723_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 (Board), under delegated
authority from the Office of Management and Budget (OMB), has extended for three years, with
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
Board to establish a branch, agency, or representative office; to establish or 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 Board uses the information to determine, in part,
whether to approve the application and, subsequently, the information is used 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 International Banking Operations:
 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 Board has revised the FR K-2 form and instructions in order to improve the clarity of
the required information; reflect the impact of new laws, regulations, capital requirements and
accounting rules; make minor changes for improved style, grammar, and comprehension; and to
harmonize the general information, certification, and confidentiality sections with other similar
forms. The revisions are intended to make initial filings more reflective of the proposed
transaction and thereby reduce the need for subsequent information requests, which delay the
Federal Reserve’s consideration of a filing and create additional burden for filers.
The current annual burden for the application/notification is estimated to be 490 hours.
The estimated average hours per response for the FR K-2 would increase by 1 hour; therefore,

the annual burden would also increase slightly to 504 hours. However, as the changes are
intended to reduce the need for follow-up questions, the overall burden for the respondent during
processing of the application/notification may not change.
Background and Justification
The Foreign Bank Supervision Enhancement Act of 1991 (FBSEA) expanded the
authority given to the Federal Reserve under the International Banking Act of 1978 (IBA).
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.
Generally, Regulation K provides that a foreign bank may not establish a U.S. branch or
agency or acquire ownership or control of a commercial lending company in the United States
unless the Board finds that the foreign bank is subject to comprehensive supervision on a
consolidated basis by the bank’s home country supervisor. However, 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 Board may approve an application by such foreign bank if (1) the
appropriate authorities in the home country of such foreign bank are working to establish
arrangements for the consolidated supervision of such bank and (2) all other factors are
consistent with approval.2
Prior to the creation of the FR K-2 in 2002, the application and notice requirements of
Subpart B of Regulation K were contained in a March 1992 directive to Reserve Bank staff
(SR 92-6).
Description of Information Collection
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 the home country bank regulatory and supervisory framework, and
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. 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.

1

See 58 FR 6348 (January 28, 1993).
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.
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The applicant is required to publish a notice in a newspaper of general circulation in the
community where the office is proposed to be located. The newspaper notice must state the
name and address of the applicant/notificant and the proposed office, and it must invite the
public to submit written comments to the appropriate Reserve Bank. The newspaper notice must
be published no more than fifteen calendar days before and no later than seven calendar days
after the date that the application is filed with the appropriate Reserve Bank.
Proposed Revisions
The Board has implemented revisions to the FR K-2 form. The changes are made in
order to improve the clarity of the required information; reflect the impact of new laws,
regulations, capital requirements and accounting rules; make minor changes for improved style,
grammar, and comprehension; and to harmonize the general information, certification, and
confidentiality sections with other similar forms. In determining which changes to propose, the
Board surveyed Reserve Bank staff to solicit recommendations for changes to the form. The
recommended changes are outlined below and are grouped into the following categories:
A. Additional items relating to information that generally was previously requested as
supplemental information subsequent to the filing of the initial application/notification
because of new laws/regulations;
B. Clarification of exact requirements of certain items;
C. Other minor changes for improved style, grammar and comprehension, and to provide
accurate citations and addresses; and
D. Harmonize the general information, certification, and confidentiality sections with other
similar forms.
Discussion of FR K-2 Revisions
A. Modified Items
The Board has modified two items in the FR K-2. These are items that, for the most part,
would be requested as additional information to supplement the questions on the current form.
By including in the FR K-2 these standard requests, time and effort will be saved on the part of
the applicant/notificant and the Federal Reserve. In addition, such information is part of the
financial statements for the majority of applicants and will not cause an increase in burden. The
modified items are:
(1) Information regarding capital ratio calculations is now based on the revised capital
guidelines, including the common equity tier 1 and applicable leverage ratio(s) (the
tier 1 leverage ratio and, if applicable, the supplementary leverage ratio) for the
applicant/notificant and the parent foreign company (Question 14.c of
Attachment A, and Question 7.c of Attachment C) and
(2) Additional information to assess the quality of the applicant’s/notificant’s assets
(Question 14.d.vi of Attachment A, and Question 7.e.vi of Attachment C).
B. Clarification of requirements and preferences:
(1) Board’s preference for electronic submission of the application; and
(2) Indication of the need to contact Board staff to determine whether to file an
Interagency Biographical and Financial Report (IBFR) for
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applications/notifications.
C. Other changes to the form include those to improve style, grammar and comprehension,
and to provide accurate citations and addresses. In addition, the wording of two
questions has been revised without any change in the required information
(Questions 14.d.v and 18.a of Attachment A, and Question 7.e.v of Attachment C).
D. Harmonization of the general information, certification, and confidentiality sections with
other similar forms (e.g., FR Y-3; OMB No. 7100-0121).
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
organization.3
Legal Status
The collection of information is mandatory and is collected pursuant to sections 7, 10,
and 13 of the International Banking Act (12 U.S.C. 3105, 3107, and 3108). Information
submitted in the FR K-2 is considered to be public unless the applying or notifying organization
requests 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 be evaluated on a case-by-case basis.
Consultation Outside the Agency
On March 23, 2018, the Board published an initial notice in the Federal Register
(83 FR 12760) requesting public comment for 60 days on the extension, with revision, of the
FR K-2. The comment period for this notice expired on May 22, 2018. The Board did not
receive any comments. The revisions will be implemented as proposed. On July 20, 2018, the
Board published a final notice in the Federal Register (83 FR 34579).
Estimate of Respondent Burden
The current annual reporting burden for the FR K-2 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 annual burden for the revised FR K-2 is estimated to increase
slightly to 504 hours. These reporting requirements of the applications and notifications
represent less than 1 percent of total Federal Reserve System paperwork burden for all reports.

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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.

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FR K-2

Number of
respondents4

Annual
frequency

Estimated
average hours
per response

Current

14

1

35

490

Proposed

14

1

36

504

Change

Estimated
annual burden
hours

14

The total annual cost to the public for this application is estimated to be $27,465 and would
increase to $28,249 with the proposed revisions.5
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 cost to the Federal Reserve System of printing, mailing, and processing the FR K-2
is negligible.

4

Of the respondents, none 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/document/support--table-size-standards.
5
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
$69, 15% Lawyers at $68, and 10% Chief Executives at $94). 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 2017, published March 30, 2018, 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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