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SUPPORTING STATEMENT

FOREIGN BRANCH REPORT OF CONDITION

INTRODUCTION

The FDIC is requesting OMB approval for a three‑year extension, with revision, of this collection of information. The current clearance for the collection expires on October 31, 2006.

The Foreign Branch Report of Condition, form FFIEC 030, contains asset and liability information along with data on certain derivatives and off-balance sheet items for foreign branches of U.S. banks. Currently, the report is filed quarterly by foreign branches that have either $2 billion or more in total assets or $5 billion or more in commitments to purchase and sell foreign currencies and annually by all other foreign branches. The revisions would eliminate five reporting items from the standard form (form FFIEC 030) for branches with total assets in excess of $250 million, create an abbreviated form (form FFIEC 030S) containing only five items to be filed annually by branches with total assets of between $50 million and $250 million (in lieu of filing the entire FFIEC 030 form), and eliminate the filing requirement for branches with less than $50 million in total assets. These changes would take effect December 31, 2006.

A. JUSTIFICATION

1. Circumstances and Need

Section 18(d)(2) of the Federal Deposit Insurance Act requires the FDIC’s prior approval for the establishment and operation of foreign branches by insured state nonmember banks “upon such conditions and pursuant to such regulations as the Corporation may prescribe.” Section 347.116 of the FDIC’s regulations requires these banks to “make and submit such reports and information as may be necessary to implement and enforce the provisions of” Subpart A of Part 347 of the FDIC’s regulations and to “submit an annual report of condition for each foreign branch pursuant to instructions provided by the FDIC.”

2. Use of Information Collected

The FDIC uses the information collected on the Foreign Branch Report of Condition to monitor the level of activity and growth of these overseas banking offices. Additionally, the reported data is needed in order to identify branches that should be targeted for examination based on the nature of their operations and to effectively plan the scope of individual branch examinations.

3. Use of Technology to Reduce Burden

The FDIC currently collects annual reports from 17 branches of insured state nonmember banks. Two foreign branches of insured state nonmember banks are now required to file quarterly reports. The Federal Reserve System (FRS) performs the collection and processing of the Foreign Branch Report of Condition on behalf of the three federal banking agencies. As a result, no special efforts have been undertaken by the FDIC to use improved information technology to reduce the burden associated with preparing and filing the Foreign Branch Report of Condition.

4. Efforts to Identify Duplication

There is no other report that provides asset, liability, and off‑balance sheet data for individual foreign branches of U.S. banks. Foreign office dollar amounts for certain balance sheet categories can be derived from the Consolidated Reports of Condition and Income (Call Report) filed by banks with foreign offices on form FFIEC 031 (OMB No. 3064‑0052); however, this information is reported on an aggregate basis for all foreign offices of the reporting bank. For Call Report purposes, the term “foreign offices” includes Edge and Agreement subsidiaries, other non‑U.S. subsidiaries, and International Banking Facilities (IBFs) as well as the actual foreign branches of the parent bank. Hence, the separate dollar amounts for each branch location are not identifiable from the FFIEC 031. Foreign office dollar amounts for off‑balance sheet items cannot be determined from the form FFIEC 031.

5. Minimizing the Burden on Small Banks

The collection does not involve small businesses or other small entities.

6. Consequences of Less Frequent Collection

“Significant branches” (i.e., those with at least $2 billion in total assets or with at least $5 billion in commitments to purchase foreign currencies and U.S. dollar exchange) report quarterly. At present, all other foreign branches report annually. The dual reporting frequency approach for this collection has ensured that up‑to‑date information is more readily available from those foreign branches that present the greatest potential risk. The reported information has also been used to monitor potential developments that may pose risks to the overall operations of the parent bank.

However, after considering the reporting burden of the current Foreign Branch Report of Condition in relation to the size of and potential risk posed by smaller foreign branches, the FDIC and the other banking agencies concluded that an abbreviated annual report form would be sufficient for foreign branches with between $50 million and $250 million in assets. The agencies also concluded that the smallest foreign branches (those with less than $50 million in assets) should be exempt from reporting. The items proposed for the abbreviated report (form FFIEC 030S) are considered the minimum information needed to serve as indicators of higher business volume, risk, and complexity in small-sized foreign branches. Annual reporting by larger foreign branches other than “significant branches” (those with $250 million or more in assets) remains adequate for the FDIC to monitor the current condition of and any changes in the overseas activity of the banks under our supervision.

7. Special Circumstances

There are no special circumstances.

8. Summary of Public Comments

On July 14, 2006, the FDIC, the Federal Reserve Board, and the Office of the Comptroller of the Currency jointly published an initial Paperwork Reduction Act Federal Register notice proposing to extend, with revision, the Foreign Branch Report of Condition (71 FR 40119). The proposed revisions would eliminate five reporting items from the standard FFIEC 030 form for branches with total assets in excess of $250 million, create an abbreviated form (form FFIEC 030S) containing only five items to be filed annually by branches with total assets of between $50 million and $250 million (in lieu of filing the entire FFIEC 030 form), and eliminate the filing requirement for branches with less than $50 million in total assets. The agencies did not receive any comments on their proposed revisions.

9. Payment of Gift to Respondents

No payment or gift will be provided to respondents.

10. Confidentiality

The Foreign Branch Reports of Condition collected by the FRS on behalf of the FDIC have been regarded as confidential as a matter of agency policy and respondents have been so advised. Should individual branch data be publicly released in the future, banks would be notified.

11. Information of a Sensitive Nature

The Foreign Branch Report of Condition contains no questions of a sensitive nature.

12. Estimate of Annual Burden

Number of annual respondents (FFIEC 030) 6

Number of annual respondents (FFIEC 030S) 7

Reports per annual respondent per year 1

Number of quarterly respondents (FFIEC 030) 2

Reports per quarterly respondents per year 4

Hours required to prepare report (FFIEC 030) 3.4

Hours required to prepare report (FFIEC 030S) 0.5

Total burden in hours 51.1

13. Estimate of Total Annual Cost Burden

Total burden in hours 51.1

Average hourly rate $45

Total cost $2,300

14. Estimate of Total Annual Cost to the Federal Government

Because of the small number of foreign branches of insured state nonmember banks, the cost to the Federal Government for all aspects of the distribution and processing of the Foreign Branch Report of Condition is nominal.

15. Reason for Program Changes or Adjustments

The change in burden of -8.2 hours consists of an adjustment of +20.4 hours resulting from two branches that are now subject to quarterly reporting and a program change of

-28.6 hours resulting from the combined effect of the reduction in the number of items on the standard form (form FFIEC 030), the creation of the abbreviated form (form FFIEC 030S), and the exemption from reporting for the smallest branches.

16. Publication

The information collected on the Foreign Branch Report of Condition is not published or publicly disclosed on an individual branch basis. Aggregate data is published by the FRS in a form that does not reveal the amounts reported by individual branches.

17. Display of Expiration Date

Not applicable.

18. Exceptions to Certification

None.

B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable.