FRY12_FRY12A_20201229_omb

Supporting Statement for the
Consolidated Holding Company Report of Equity Investments in Nonfinancial Companies
(FR Y-12; OMB No. 7100-0300) and the
Annual Report of Merchant Banking Investments Held for an Extended Period
(FR Y-12A; OMB No. 7100-0300)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years, with
revision, the Consolidated Holding Company Report of Equity Investments in Nonfinancial
Companies (FR Y-12; OMB No. 7100-0300) and the Annual Report of Merchant Banking
Investments Held for an Extended Period (FR Y-12A; OMB No. 7100-0300). The FR Y-12
report collects information from certain domestic bank holding companies (BHCs), savings and
loan holding companies (SLHCs), and U.S. intermediate holding companies (IHCs) (collectively,
holding companies)1 on their equity investments in nonfinancial companies. The FR Y-12A
report is filed annually by financial holding companies (FHCs)2 with merchant banking
investments that are approaching the end of the holding periods permissible under the Board’s
Regulation Y - Bank Holding Companies and Change in Bank Control (12 CFR Part 225) , as
described in the Respondent Panel section below.3
The Board revised the FR Y-12 by (1) adding a new column to Schedules A and C to
capture unrealized holding gains (losses) on equity securities not held for trading recognized as
income in accordance with Accounting Standards Update 2016-01 (ASU 2016-01, Recognition
and Measurement of Financial Assets and Financial Liabilities), (2) revising an existing column
in Schedules A and C in order to capture unrealized holding gains and losses on equity securities
that are not within the scope of ASU 2016-01, (3) adding guidance to the instructions for the
reporting of equity securities in accordance with ASU 2016-01, and (4) making other minor
clarifications and conforming edits to the form and instructions. The revisions to the FR Y-12 are
applicable as of the December 31, 2020, reporting date. The Board did not revise the FR Y-12A.
The current estimated total annual burden for the FR Y-12 and FR Y-12A is 2,366 hours,
and would remain unchanged with the revisions. The form and instructions are available on the
Board’s public website at https://www.federalreserve.gov/apps/reportforms/default.aspx.

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The FR Y-12 must be filed by (1) each top-tier domestic holding company that files a Consolidated Financial
Statements for Holding Companies (FR Y-9C; OMB No. 7100-0128) and has aggregate nonfinancial equity
investments that equal or exceed the lesser of $100 million or 10 percent of the holding company’s consolidated
Tier 1 capital as of the report date and (2) each top-tier domestic holding company that files a Parent Company Only
Financial Statements for Small Holding Companies (FR Y-9SP; OMB No. 7100-0128) and has aggregate
nonfinancial equity investments that equal or exceed 10 percent of the holding company’s total capital as of the
report date.
2
As used in this supporting statement, the term FHC refers both to BHCs that are FHCs and to SLHCs, foreign
banks, and IHCs that have made an effective election to be treated as FHCs.
3
See 12 CFR 225.172(b)(1), (4) and 225.173(c)(1)-(2).

Background and Justification
FR Y-12
The Bank Holding Company Act of 1956 (BHC Act) generally prohibits a BHC from
making investments in non-banking organizations. However, the BHC Act permits BHCs to
make certain nonfinancial equity investments, such as investments in companies that engage in
activities the Board has determined to be closely related to banking.4 Similar activities
limitations apply to foreign banking organizations (FBOs), including those with IHCs. 5 In
addition, the Home Owners’ Loan Act (HOLA) permits a SLHC to engage in many activities the
Board has determined to be permissible for a BHC.6
Holding company investments in nonfinancial companies grew substantially during the
late 1990s and have continued at a significant level. These investments contribute significantly to
earnings and the gain/loss received from the equity investments in nonfinancial companies will
flow through retained earnings or accumulated other comprehensive income at institutions
actively involved in this business line. Equity investments also contribute to the volatility of
earnings and capital, and increase some institutions’ risk profiles.
In September 2001, the Board instituted the FR Y-12 to collect information from holding
companies on their equity investments in nonfinancial companies. The information collected
allows the Board to monitor the growth in those investments and their contributions to capital,
profitability, risk, and volatility. The FR Y-12 provides more timely information than can be
obtained through periodic supervisory reviews of this business line and serves to identify
institutions that are significantly changing their risk profiles in this business line or devoting
significant resources to covered investments.
FR Y-12A
A BHC that makes an effective election to become an FHC may invest in a company that
engages in activities that are financial in nature7 and, under merchant banking authority, may
make investments of any amount, in any type of nonfinancial company, subject to certain
requirements.8 In addition, SLHCs, foreign banks, and IHCs may elect to be treated as FHCs.
The investments permissible under FHCs’ merchant banking authority are substantially
broader in scope than the investment activities otherwise permissible for holding companies.
Thus, these investments present the potential for additional volatility and risk in banking
organizations’ portfolios.
4

See e.g., 12 U.S.C. § 1843(c)(8); 12 U.S.C. § 1843(c)(6) (investments of less than five percent of the outstanding
voting shares of a company). A BHC includes a foreign banking organization, including an IHC. 12 CFR
225.2(c)(2).
5
See 12 U.S.C. § 3106(a) (applying the provisions of the BHC Act to FBOs); 12 CFR 225.2(c)(2) (defining BHCs
to include FBOs for purposes of subpart C, Nonbanking Activities and Acquisitions by Bank Holding Companies, of
Regulation Y).
6
12 U.S.C. §§ 1467a(c)(2)(F), (H).
7
12 U.S.C. § 1843(k)(1)(A).
8
12 U.S.C. § 1843(k)(4)(H).

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The Board’s Regulation Y generally authorizes an FHC to own or control a merchant
banking investment for no longer than 10 years. However, merchant banking investments made
in, or held through, a private equity fund may be held for the duration of the fund, up to a
maximum of 15 years. An FHC must obtain the Board’s approval to own or hold a merchant
banking investment beyond these holding periods.
In order to monitor compliance with these holding period restrictions, the FR Y-12A
requires FHCs to report annually merchant banking investments that they have held for longer
than 8 years (or 13 years in the case of an investment held through a qualifying private equity
fund). The FR Y-12A data is a useful tool for bank examiners to monitor merchant banking
investments that are approaching the end of their applicable holding period. Because merchant
banking investments are investments by a holding company in a nonfinancial company,
information regarding these investments is also included as part of the aggregate investment
totals reported on the FR Y-12 report.
Description of Information Collection
FR Y-12
The quarterly FR Y-12 collects financial data on nonfinancial equity investments by type
of investment, type of security, type of entity within the banking organization, and nonfinancial
investment transactions during the reporting period. The current FR Y-12 reporting form is
comprised of four schedules.
Schedule A - Type of Investments
This schedule collects information on the acquisition cost, net unrealized holding gains
not recognized as income, carrying value, and publicly quoted value for direct investments made
in public entities, nonpublic entities, and all indirect investments. The memoranda items collect
information on the number of companies in which investments are made for the entire portfolio,
amount of investments made under the merchant banking authority, the pre-tax impact on net
income, amount of investments managed for others, and the pre-tax impact of management fee
income.
Schedule B - Type of Security
This schedule collects information on the acquisition cost and carrying value of each type
of security (common stock, convertible debt and convertible preferred stock, and other equity
instruments) held by the reporting institution. The memorandum item collects information on
unused equity commitments and warrant activity.
Schedule C - Type of Entity within the Banking Organization
This schedule identifies the type of entity within the holding company structure through
which the investments reported in schedules A and B are held (for example, broker-dealers) and
collects information on the acquisition cost, net unrealized holding gains not recognized as
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income, and carrying value. The memoranda items collect information on the amount of
domestic and foreign investments.
Schedule D - Nonfinancial Investment Transactions During Reporting Period
This schedule collects information on all merchant banking activity of the holding
company, on an aggregate basis, for the reporting period. Columns A and B collect acquisition
cost and carrying value for all purchases, returns of capital, and net changes in valuation made
for all direct public investments. Columns C and D collect acquisition cost and carrying value for
all transactions involving all direct nonpublic investments. Columns E and F collect information
on the same items for all transactions involving indirect (fund) investments. These data provide
valuable insight into the scope of activity on a transaction basis and, when reviewed over time,
provide critical trend data useful for holding company supervisory oversight as well as provide
valuable information to facilitate industry studies.
FR Y-12A
The FR Y-12A report is filed annually by any FHC with merchant banking investments it
has held for longer than 8 years (or 13 years in the case of an investment held through a
qualifying private equity fund). The FR Y-12A collects the following information on such
investments:
 The legal name and location of the corporate entity within the FHC organization that
holds the covered investment,
 The date the FHC acquired the covered investment,
 The holding period expiration date of the covered investment,
 The legal name and location of the company held,
 The primary activity of the company held (using the North American Industry
Classification System (NAICS) activity codes for commonly reported activities wherever
possible). FHCs provide a text description of the primary activity of the company held
only if it is unable to identify a five- or six-digit NAICS code corresponding to the
activity,
 The type of interest held by the FHC (for example, common stock),
 The percentage of ownership held by the FHC (both voting and non-voting),
 The FHC’s acquisition cost of the covered investment,
 The value at which the covered investment currently is carried on the FHC’s books
(carrying value), and
 A brief narrative explanation of the FHC’s plan and schedule for disposition of a covered
investment.

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Respondent Panel
The FR Y-12 panel comprises a subset of top-tier domestic holding companies that file
the FR Y-9C or the FR Y-9SP.9 A holding company that files the FR Y-9C must file the
FR Y-12 if it has aggregate nonfinancial equity investments that equal or exceed the lesser of
$100 million or 10 percent of the holding company’s consolidated Tier 1 capital as of the report
date. A holding company that files the FR Y-9SP must file the FR Y-12 if it has aggregate
nonfinancial equity investments that equal or exceed 10 percent of the holding company’s total
capital as of the report date.
As noted, FHCs generally have to submit an FR Y-12A if they hold merchant banking
investments for longer than 8 years (or 13 years in the case of an investment held through a
qualifying private equity fund). The applicable reporting periods (8 or 13 years) for merchant
banking investments are less than the permissible holding periods (10 or 15 years) for the
investments so that the Board can monitor investments that are approaching the end of the
holding periods generally permitted under Regulation Y.
Revisions to the FR Y-12
In January 2016, the Financial Accounting Standards Board issued an updated
accounting standard (ASU 2016-01) to address certain aspects of the recognition, measurement,
presentation, and disclosure of financial instruments. In order to make the FR Y-12 report
consistent with ASU 2016-01, the Board revised Schedules A and C by creating a new
Column B titled, “Unrealized Holding Gains (Losses) on Equity Securities not Held for
Trading.” The new Column B will capture the unrealized gains and losses on equity securities
not held for trading that are reported in net income on the FR Y-9C or FR Y-9SP. New column B
will only be completed by holding companies that have adopted ASU 2016-01.
The current Column B in Schedules A and C will be changed to Column C with the title,
“All Other Unrealized Holding Gains (Losses) on Equity Securities,” in order to capture
unrealized holding gains and losses on equity securities that are not within the scope of ASU
2016-01, and thus are reported in accumulated other comprehensive income on the FR Y-9C or
FR Y-9SP. Current Column C (Carrying Value) in Schedules A and C will become Column D,
and current Column D (Publicly Quoted Value) in Schedule A will become Column E.

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In 2012, the Board indicated that it would require supervised securities holding companies (SHCs) to file the
FR Y-12 and FR Y-12A reports. 77 FR 32881, 32883 (June 4, 2012). However, no such revisions were ever made to
include SHCs as respondents on either report. Upon reflection, the Board has determined that it would not be
appropriate at this time to add supervised SHCs to the respondent panel for the FR Y-12 or FR Y-12A reports. A
supervised SHC would not be subject to the restrictions on nonbanking activities that limit the investments of other
holding companies. Therefore, any information gathered about SHCs’ investments on the FR Y-12 would be of
limited use, and would not be comparable to data gathered from other holding companies. Moreover, adding
supervised SHCs to the FR Y-12 reporting panel would require significant revisions to the FR Y-12 instructions in
order to account for the differences in legal treatment between supervised SHCs and the other respondents. Such
revisions could lead to confusion among current FR Y-12 reporters.
With respect to the FR Y-12A, the Board is not proposing to add supervised SHCs to the respondent panel because
supervised SHCs are not restricted in their ability to make investments in nonfinancial companies, and their
investments are not subject to the merchant bank holding periods that apply to FHC investments.

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In addition, the Board revised the FR Y-12 instructions in accordance with the above
changes and corrected typographical and other minor errors in the FR Y-12. The changes to the
FR Y-12 are consistent with changes previously made to the FR Y-9 family of reports (OMB No.
7100-0128).
Time Schedule for Information Collection
The FR Y-12 is prepared quarterly, as of the end of March, June, September, and
December, for holding companies that file the FR Y-9C, and semiannually for those holding
companies that file the FR Y-9SP, as of the end of June and December. The FR Y-12 reports are
submitted through the Federal Reserve System’s Reporting Central electronic submission
application or by mail to the appropriate Reserve Bank within 45 calendar days after the as of
date for all FR Y-9C and FR Y-9SP respondents.
The FR Y-12A report is filed annually by an FHC with merchant banking investments
they have held for longer than 8 years (or 13 years in the case of an investment held through a
qualifying private equity fund). The report must be submitted by February 15th of the following
calendar year. For example, if, as of December 31, 2019, an FHC owns a covered investment, the
FHC must submit an FR Y-12A for the investment by February 15, 2020. Reporting FHCs
should submit by mail or hand deliver an original and one copy of the report to the appropriate
Federal Reserve Bank.
Public Availability of Data
Data reported on the FR Y-12 and FR Y-12A reports are not published. With certain
exceptions, microdata are considered public information and are available through the Board’s
Freedom of Information Office.
Legal Status
The Board is authorized to collect information on the FR Y-12 and FR Y-12A reports
from BHCs (including BHCs that are FHCs) pursuant to section 5(c) of the BHC Act (12 U.S.C.
§ 1844(c)(1)(A)), from SLHCs pursuant to section 10(b)(2) of the Home Owners’ Loan Act (12
U.S.C. § 1467a(b)(2)), as amended by sections 369(8) and 604(h)(2) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Dodd-Frank Act), and from IHCs pursuant to
section 5(c) of the BHC Act (12 U.S.C. § 1844(c)(1)(A)), as well as pursuant to sections
102(a)(1) and 165 of the Dodd-Frank Act (12 U.S.C. §§ 5311(a)(1) and 5365),10 and
Regulation YY (12 CFR 252.153(b)(2)).
Section 165(b)(2) of Title I of the Dodd-Frank Act (12 U.S.C. § 5365(b)(2)), refers to “foreign-based bank
holding company.” Section 102(a)(1) of the Dodd-Frank Act (12 U.S.C. § 5311(a)(1)), defines “bank holding
company” for purposes of Title I of the Dodd-Frank Act to include foreign banking organizations that are treated as
BHCs under section 8(a) of the International Banking Act of 1978 (12 U.S.C. § 3106(a)). The Board has required,
pursuant to section 165(b)(1)(B)(iv) of the Dodd-Frank Act (12 U.S.C. § 5365(b)(1)(B)(iv)), certain of the foreign
banking organizations that are subject to section 165 of the Dodd-Frank Act to form U.S. intermediate holding
companies. Accordingly, the parent foreign-based organization of a U.S. IHC is treated as a BHC for purposes of the
BHC Act and section 165 of the Dodd-Frank Act. Because section 5(c) of the BHC Act authorizes the Board to
10

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In addition, with respect to the FR Y-12A report, section 4(k)(7)(A) of the BHC Act (12
U.S.C. § 1843(k)(7)(A)) authorizes the Board and the Treasury Department to jointly develop
implementing regulations governing merchant banking activities for purposes of section
4(k)(4)(H) of the BHC Act. Section 4(k)(4)(H) of the BHC Act (12 U.S.C. § 1843(k)(4)(H)) and
subpart J of the Board’s Regulation Y (12 CFR 225.170 et seq.) authorize a BHC that has made
an effective FHC election to acquire merchant banking investments that are not otherwise
permissible for an FHC. Section 10(c)(2)(H) of HOLA, as amended by section 606(b) of the
Dodd-Frank Act (12 U.S.C. § 1467a(c)(2)(H)) and section 8(a) of the International Bank Act of
1978 (12 U.S.C. § 3106(a)), extend certain authorities and requirements of the BHC Act to
SLHCs and to foreign banks, respectively. The obligation to respond to the FR Y-12 and
FR Y-12A reports is mandatory.
The Board does not consider information collected on the FR Y-12 report to be
confidential, and the completed version of this report generally is made available to the public
upon request. However, in certain instances, specific information collected on an individual
institution’s FR Y-12 report may be exempt from disclosure pursuant to exemption 4 of the
Freedom of Information Act (FOIA), which protects from public disclosure “trade secrets and
commercial or financial information obtained from a person [that is] privileged or confidential”
(5 U.S.C. § 552(b)(4)). A reporting holding company may request confidential treatment for the
specific data items the company believes should be withheld pursuant to exemption 4 of the
FOIA, as provided in the Board’s Rules Regarding Availability of Information (12 CFR Part
261.15). A request for confidential treatment should be submitted in writing concurrently with
the submission of the FR Y-12 report. This written request must identify the specific data for
which confidential treatment is sought and must provide the legal justification for which
confidentiality is requested. The Federal Reserve will review any such request on a case-by-case
basis to determine if confidential treatment is appropriate. The Federal Reserve may
subsequently release information for which confidential treatment is requested, if (1) disclosure
of such information is required by law (other than 5 U.S.C. § 552), (2) the reporting holding
company requested confidential treatment pursuant to 5 U.S.C. 552(b)(4) and more than 10 years
have passed since the date of the submission unless the reporting company has requested and
provided justification for a longer designation period, or (3) less than 10 years have passed since
the request, but the Board believes that the information cannot be withheld from disclosure under
5 U.S.C. § 552(b)(4), and the reporting holding company is provided with written notice of the
Board’s views and with an opportunity to object to the Board’s disclosure.
The Board generally considers the information collected on the FR Y-12A to be
confidential commercial and financial information under exemption 4 of the FOIA (5 U.S.C. §
552(b)(4)). In addition, if the FR Y-12A data is obtained as a part of an examination or
supervision of a financial institution, this information may also be withheld pursuant to
exemption 8 of the FOIA (5 U.S.C. § 552(b)(8)).
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
require reports from subsidiaries of BHCs, section 5(c) provides additional authority to require U.S. IHCs to report
the information contained in the FR Y-12 and FR Y-12A reports.

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Public Comments
On August 21, 2020, the Board published an initial notice in the Federal Register
(85 FR 51719) requesting public comment for 60 days on the extension, with revision, of the
FR Y-12 and FR Y-12A. The comment period for this notice expired on October 20, 2020. The
Board did not receive any comments. The Board adopted the extension, with revision, of the
FR Y-12 and FR Y-12A as originally proposed. On December 11, 2020, the Board published a
final notice in the Federal Register (85 FR 80100).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR Y-12 and
FR Y-12A is 2,366 hours, and would remain unchanged with the revisions due to firms currently
reporting net unrealized gains (losses) on equity investments similarly on the FR Y-9C and
FR Y-9SP reports. The number of FR Y-12 (quarterly and semiannual) respondents is based on
the amount of respondents that submitted data for the June 30, 2019, as of date, and the number
of FR Y-12A respondents is based on the amount of respondents that submitted data for the
December 31, 2018, as of date. These reporting requirements represent less than 1 percent of the
Board’s total paperwork burden.
Estimated
number of
respondents11
22
7
91

FR Y-12 and FR Y-12A
FR Y-12 (Quarterly)
FR Y-12 (Semiannual)
FR Y-12A
Total

Estimated
Estimated
Annual
average hours annual burden
frequency
per response
hours
4
16.5
1,452
2
16.5
231
1
7.5
683
2,366

The estimated total annual cost to the public for these information collections is
$136,637.12
Sensitive Questions
These collections of information contain no questions of a sensitive nature, as defined by
OMB guidelines.

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Of these respondents, 0 FR Y-12 (Quarterly), 3 FR Y-12 (Semiannual), and 10 FR Y-12A are considered small
entities as defined by the Small Business Administration (i.e., entities with less than $600 million in total assets),
https://www.sba.gov/document/support--table-size-standards. There are no special accommodations given to
mitigate the burden on small institutions.
12
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 $20, 45% Financial Managers at
$71, 15% Lawyers at $70, and 10% Chief Executives at $93). 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 2019, published March 31, 2020, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing the
FR Y-12 and FR Y-12A is $31,600.

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