FRK1_20180720_omb

Supporting Statement for the
International Applications and Prior Notifications under
Subparts A and C of Regulation K
(FR K-1; OMB No. 7100-0107)
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 Subparts A and C of
Regulation K (FR K-1; OMB No. 7100-0107). Subpart A of Regulation K - International
Banking Operations governs the foreign investments and activities of member banks, Edge and
agreement corporations,1 bank holding companies (BHCs), and certain investments by foreign
organizations. Subpart C of Regulation K governs investments in export trading companies.
The FR K-1 information collection contains the following eleven attachments for the application
and notification requirements embodied in Subparts A and C of Regulation K:
• Attachment A
Notification to Establish Initial Foreign Branches of Member Banks, Edge
Corporations, or Foreign Subsidiaries (section 211.3(b)(2) of Regulation
K) or Application for Branches to Engage in New Activities (section
211.4(b) of Regulation K)
• Attachment B
Notification to Establish Additional Foreign Branches of Member Banks,
Edge Corporations, or Foreign Subsidiaries (section 211.3(b)(3) of
Regulation K)
• Attachment C
Application to Establish, Acquire, or Change Control of an Edge
Corporation (section 211.5 of Regulation K), or for an Edge Corporation
to Engage in Certain Domestic Activities (section 211.6(b) of
Regulation K)
• Attachment D
Model Articles of Association for an Edge Corporation (section 211.5 of
Regulation K)
• Attachment E
Model Organization Certificate for an Edge Corporation (section 211.5 of
Regulation K)
• Attachment F
Notification to Establish a Domestic Branch of an Edge Corporation
(section 211.5(f) of Regulation K)
• Attachment G
Application to Amend Articles of Association of an Edge Corporation
(section 211.5(c) of Regulation K)
• Attachment H
Application to Invest in Other Foreign Organizations (sections 211.4(a)(8)
and 211.9(g) of Regulation K) or to Engage in New Foreign Activities
(section 211.10(c) of Regulation K) for Member Banks, Edge or
Agreement Corporations, and BHCs
• Attachment I
Notification to Invest in Other Foreign Organizations for Member Banks,
Edge or Agreement Corporations, and BHCs (section 211.9(f) of
Regulation K)
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References to Edge corporations are inclusive of agreement corporations. An agreement corporation is a
corporation that has entered into an agreement with the Board that it will not exercise any power that is
impermissible for an Edge corporation.

• Attachment J
• Attachment K

Application to Invest in Excess of Ten Percent of Capital and Surplus in
Edge Corporations (section 211.5(h) of Regulation K)
Notification to Establish Export Trading Companies (section 211.34 of
Regulation K)

The Board requires these applications for regulatory and supervisory purposes and to
allow the Board to fulfill its statutory obligations under the Federal Reserve Act (FRA) and the
Bank Holding Company Act of 1956 (BHC Act). The applications are event-generated and
provide the Federal Reserve with information necessary to evaluate each of the proposed
transactions.
The Board has revised the FR K-1 form and instructions primarily to make minor
changes for improved style, grammar, and comprehension, and to harmonize the general
information, certification, and confidentiality sections with other similar forms. No changes
have been made to the information required in various attachments. The current annual burden
for the FR K-1 is estimated to be 1,013 hours. Given that the proposed revisions are technical in
nature, the estimated annual burden would remain unchanged.
Background and Justification
Sections 25 and 25A of the FRA and sections 4(c)(13) and 4(c)(14) of the BHC Act
govern the formation of Edge and agreement corporations and the international and foreign
activities of U.S. banking organizations, including those of national banks, state member banks,
and BHCs. Section 25 of the FRA authorizes the establishment of agreement corporations,
foreign branches, and permits investments in foreign banks in accordance with regulations
prescribed by the Federal Reserve. Section 25A of the FRA authorizes the establishment of
Edge corporations and empowers these corporations to engage in activities both in the United
States and abroad. Section 4(c)(13) of the BHC Act authorizes BHCs to invest in companies that
do business abroad. Section 4(c)(14) of the BHC Act authorizes BHCs to invest in export
trading companies.
Pursuant to these statutory provisions, the Board adopted various regulatory provisions,
all of which have been consolidated in the Board’s Regulation K, setting forth the procedures for
making investments and engaging in activities under these statutes. These procedures include
(1) a specific consent procedure, under which the banking organization may make the proposed
investment or engage in the proposed activity only after receiving the Board’s prior approval,
(2) a notification procedure, under which the banking organization may make an investment after
having given appropriate notice to the Board, and (3) a general consent procedure, under which
the banking organization may make certain investments that may subsequently be reviewed
during the examination process.
The various attachments to the FR K-1 instructions specify the information a company
must include when submitting a Regulation K application or prior notice. The information
required in the instructions pertains only to the specific investment or activity proposed. The
information reported on the FR K-1 is not available from any other source.

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Description of Information Collection
A general description of each attachment is provided below.
Foreign Branches (Attachments A and B)
The Notification to Establish Initial Foreign Branches of Member Banks, Edge
Corporations, or Foreign Subsidiaries or Application for Branches to Engage in New Activities
(Attachment A) requires information about the location of the proposed branch, and information
needed to assess the purpose of the branch, its proposed activities, projected growth,
management, country exposure, and capitalization.
The Notification to Establish Additional Foreign Branches of Member Banks, Edge
Corporations, or Foreign Subsidiaries (Attachment B) is used if the applicant has branches in two
or more countries and wishes to establish a branch in an additional country. The notification
requires a description of the activities of the proposed branch and the branch’s projected asset
size at the end of the third year of operation.
Edge Corporations (Attachments C, D, E, F, and G)
The Application to Establish, Acquire, or Change Control of an Edge Corporation or for
an Edge Corporation to Engage in Certain Domestic Activities (Attachment C) requires slightly
different information for each type of transaction. The application requires information on the
proposed activities, proposed management, the ability to serve the convenience and needs of the
community, and any related requests for investment authority, as well as projected balance sheets
and income statements.
The application for Edge Corporations to Engage in Domestic Activities not Listed in
Regulation K requires, in addition to projected balance sheets and income statements,
information on the proposed activities, any related requests for investment authority, and the
ability to serve the convenience and needs of the community. Foreign organizations seeking to
either establish or acquire control of an existing Edge corporation also must furnish information
relating to the home country supervision and regulation of the foreign organization, as well as
information to determine whether the Federal Reserve will have adequate access to information.
The notification for change in control of an Edge corporation requires much of the same
information that is needed in an application to establish an Edge corporation.
The application to establish an Edge corporation requires submission of the Model
Articles of Association for an Edge Corporation (Attachment D) and the executed Model
Organization Certificate for an Edge Corporation (Attachment E), as prescribed by section 25A
of the FRA.
The Notification to Establish a Domestic Branch of an Edge Corporation (Attachment F)
requires information about the location and purpose of the proposed branch, its ability to serve
the convenience and needs of the community, any amended articles of association, and the
projected asset size of the branch at the end of the third year of operations.

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The Application to Amend Articles of Association of an Edge Corporation
(Attachment G) requires the Edge Corporation to submit an executed and dated certificate of
amendment to the existing articles of association and a statement describing the reasons for the
requested changes.
Investments in Other Foreign Organizations (Attachments H and I)
The Application to Invest in Other Foreign Organizations or to Engage in New Foreign
Activities for Member Banks, Edge or Agreement Corporations, and BHCs (Attachment H)
requires slightly different information for each type of transaction. For applications to invest in
other foreign organizations, a description of the proposed investment, financial information,
country exposure information, and information on compliance with foreign requirements must be
included. Additional information is required for investments in joint ventures, including the
ownership structure, any contracts or agreements of support, and any impediments to the
provision of information to U.S. regulators.
For applications to engage in foreign activities not previously determined to be
permissible, required information includes a full description of the proposed activities, financial
information, and information on compliance with foreign requirements. Similar to above,
additional information is required for investments in joint ventures. Applicants seeking to
engage in any activity that the Board has not previously determined to be of a banking or
financial nature must discuss the extent to which such activity is usual in connection with the
transaction of banking or other financial operations in the country in which the activity is to be
conducted, supported by examples.
Investments that do not meet the criteria either for specific consent or for general consent,
as detailed in section 211.9 of Regulation K (12 CFR 211.9), require prior notification. The
Notification to Invest in Other Foreign Organizations for Member Banks, Edge or Agreement
Corporations, and BHCs (Attachment I) requires information on the name and location of the
investment, the amount of investment and percentage of ownership as a result of the investment,
a description of proposed activities, abbreviated financial statements and, for joint ventures, the
ownership structure and managerial support provided by the investor.
Invest in Excess of Ten Percent of Capital and Surplus in Edge Corporations
(Attachment J)
As a result of the enactment of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996, which amended the FRA, member banks may invest over 10 percent and
up to 20 percent of their capital and surplus in Edge corporation subsidiaries, provided the Board
determines that such investments are not unsafe and unsound. The Application to Invest in
Excess of Ten Percent of Capital and Surplus in Edge Corporations (Attachment J) requires the
information set forth in section 211.5 of Regulation K, including (1) the composition of the
assets of the bank’s Edge Corporation, (2) the total capital invested by the bank in its Edge
Corporation when combined with retained earnings of the Edge Corporation (including amounts
invested in and retained earnings of any foreign bank subsidiaries), (3)purpose of the investment,
and (4) capital ratios for the bank that deconsolidate and deduct the aggregate investment in and

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assets of all Edge Corporations and all foreign bank subsidiaries.
Investment in Export Trading Companies (Attachment K)
The Notification to Establish an Export Trading Company (Attachment K) is essentially a
modified version of Attachment H. It requires a briefer description of the proposed investment,
financial information, and additional information for investments in joint ventures.
Proposed Revisions
As indicated above, no items are being added to the required information. The Board has
implemented minor revisions to the FR K-1 form. Primarily, the General Information and
Instructions section of the form has been revised to make it similar to other application forms in
terms of certification and confidentiality information. In addition, a statement that the Board
prefers that applicants/notificants electronically submit the application/notification and that prefiling option is available has been added. Other minor changes to the form include those to
improve style, grammar, and comprehension, and to provide accurate citations and addresses.
Time Schedule for Information Collection
The FR K-1 information collections are event generated and submitted by the applying or
notifying organization, in accordance with the requirements embodied in Regulation K, to the
Federal Reserve Bank designated as responsible for that banking organization.
Legal Status
The collection of information is mandatory and collected pursuant to sections 25 and 25A
of the Federal Reserve Act (12 U.S.C. 601-604(a) and 611-631) and sections 4(c)(13), 4(c)(14),
and 5(c) of the Bank Holding Company Act (12 U.S.C. 1843(c)(13), 1843(c)(14), and 1844(c)).
The information submitted in the FR K-1 is considered to be public unless an institution requests
confidential treatment for portions of the particular application or notification. Applicants may
rely on any Freedom of Information Act (FOIA) exemption, but such requests for confidentiality
must contain detailed justifications corresponding to the claimed FOIA exemption. Requests for
confidentiality must 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 12761) requesting public comment for 60 days on the extension, with revision, of the
FR K-1. 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 34578).

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Estimate of Respondent Burden
The annual reporting burden for the FR K-1, shown in the following table, is based on the
average number of applications and notifications filed during a typical year. These reporting
requirements of the applications and notifications represent less than 1 percent of total Federal
Reserve System paperwork burden for all reports.
Estimated
Estimated
Number of
Annual
average
hours
annual
burden
respondents2 frequency
per response
hours

FR K-1
Attachments
A and B
C, D, E, F, and G
H and I
J
K

5
15
12
2
1

2
2
3
1
1

11.5
10
15.5
10
20

Total

115
300
558
20
20
1,013

The total annual cost to the public for these reports is estimated to be $56,779.3
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 and mailing instructions is negligible.

2

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.
3
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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