SPST 0125 Foreign Banking and Investment by SNBs 2023 FINAL

SUPPORTING STATEMENT

FOREIGN BANKING AND INVESTMENT BY INSURED STATE NONMEMBER BANKS

(OMB No. 3064-0125)

INTRODUCTION

The FDIC is requesting OMB approval of the three-year extension, without change, of its collection of information entitled “Foreign Banking and Investment by Insured State Nonmember Banks” (OMB Control No. 3064-0125) which consists of reporting and recordkeeping requirements contained in 12 CFR Part 347 (International Banking) and 12 CFR Part 303 (Rules of Practice and Procedure). There is no change in the method or substance of the collection which currently expires on July 31, 2023.

A. JUSTIFICATION

1. Circumstances that make the collection necessary:

Part 347 implements 12 USC 1828(d)(2) and 1828(l), sections of the Federal Deposit Insurance Act which authorize the FDIC to establish conditions for foreign branching by insured state nonmember banks and investment in foreign organizations by nonmember banks. The collections of information are discussed in detail below. They consist of applications related to establishing and closing a foreign branch; applications related to acquiring stock of a foreign organization; and records and reports which a nonmember bank must maintain once it has established a foreign branch or foreign organization.

Section 18(d)(2) of the FDI Act requires a nonmember bank to obtain the FDIC’s consent to establish or operate a branch in a foreign country (foreign branch). Section 18(d)(2) also authorizes the FDIC to impose conditions and issue regulations governing the operation and affairs of foreign branches. FDIC’s regulations at 12 CFR 347.117-119 and 303.182 set forth procedures for a nonmember bank to apply for permission to establish a foreign branch, and to engage through a foreign branch in activities not otherwise approved by section 347.117-118. These rules also require notice upon the closing of a foreign branch under section 347.121. The notices and applications constitute information collections under the Paperwork Reduction Act.

Foreign Investments

Section 18(l) of the FDI Act, 12 U.S.C. 1828(l), requires a nonmember bank to obtain the FDIC’s consent to acquire and hold, directly or indirectly, stock or other evidences of ownership in any foreign bank or other entity. Section 18(l) also states that these entities may not engage in any activities in the United States except as the FDIC’s Board of Directors has determined are incidental to the international or foreign business of these entities. In addition, section 18(l) authorizes the FDIC to impose conditions and issue regulations governing these investments. The notices and applications constitute information collections under the Paperwork Reduction Act.

Supervision and Recordkeeping of Foreign Activities

Losses incurred by a nonmember bank’s foreign branches or foreign organizations will cause corresponding losses to the nonmember bank itself. In extreme cases, banks in other countries have collapsed as a result of their failure to properly oversee their foreign operations. The nonmember bank must establish a reporting system sufficient to permit the bank to know the true condition of its foreign operations and exercise prudent oversight and control to protect itself from this risk. FDIC’s regulations at 12 CFR 347.116 address these issues by requiring a nonmember bank with a foreign branch, or which holds 20 percent or more of the voting equity interests of a foreign organization, to maintain sufficient records on its activities to ensure the nonmember bank may properly control and oversee its foreign operations. These recordkeeping requirements constitute information collections under the Paperwork Reduction Act.

2. Use of the information:

The FDIC will use the information as part of its supervisory process. The information in the notices and applications is used as part of the process by which the FDIC determines whether to permit a nonmember bank to establish or operate a foreign branch and to help the FDIC determine whether to permit a nonmember bank to make a foreign investment. The recordkeeping requirements assist foreign organizations to monitor their condition and control their operations.

3. Consideration of the use of improved information technology:

Currently, the low number of respondents for the reporting requirements in this collection does not make conversion to electronic submission cost beneficial. For the recordkeeping requirements, institutions may use whatever technology is most efficient for them as long as they have the information available on-site for review by state and federal examiners.

4. Efforts to identify duplication:

This collection does not duplicate information provided elsewhere.

5. Methods used to minimize burden if the collection has a significant impact on a substantial number of small entities:

FDIC data show that nonmember banks with foreign branches generally have assets over $850 million (the SBA’s threshold for small banks). Consequently, this information collection does not have a significant impact on a substantial number of small entities.

6. Consequences to the Federal program if the collection were conducted less frequently:

For the notices and applications requirements, the information is collected only once occasionally. For the recordkeeping requirements, affected nonmember banks are expected to collect relevant information as frequently as is necessary to keep abreast of the foreign operation’s condition. Any less frequent collection would expose the nonmember bank to the risk that undetected problems at the foreign operation would cause loss to the nonmember bank and would hinder the FDIC’s ability to assess the safety and soundness of FDIC-supervised institutions and take corrective action as needed.

7. Special circumstances necessitating collection inconsistent with 5 CFR Part 1320.5(d)(2):

None. The information is collected in a manner consistent with 5 CFR 1320.5(d)(2).

8. Efforts to consult with persons outside the agency:

The FDIC published a notice in the Federal Register seeking comment for a 60-day period on renewal of this information collection on February 10, 2023 (88 FR 8860). No comments were received.

9. Payment or gifts to respondents:

None.

10. Any assurance of confidentiality:

Information is kept private to the extent allowed by law. The information is generally available to the public; however, any information deemed to be of a confidential nature would be exempt from public disclosure in accordance with the provisions of the Freedom of Information Act (5 U.S.C. 552).

11. Justification for questions of a sensitive nature:

Not applicable. No sensitive information is collected.

12. Estimate of hour burden including annualized hourly costs:

Summary of Estimated Annual Burden (OMB No. 3064-0125)
Information Collection (Obligation to Respond)	Type of Burden (Frequency of Response)	Number of Respondents	Number of Responses per Respondent	Time per Response (HH:MM)	Annual Burden (Hours)
1. Notices or applications to establish, move, or close a foreign branch, 12 CFR 303.182 (Mandatory)	Reporting (On Occasion)	1	1	02:00	2
2. Filings for authorization for foreign branch to engage in activities other than those permitted under 12 CFR 347.115, 12 CFR 303 (Mandatory)	Reporting (On Occasion)	1	1	40:00	40
3. Filings to invest in foreign organizations, or to engage in certain activities through foreign organizations, 12 CFR 303.183(b) and 303.121, (Mandatory)	Reporting (On Occasion)	2	1	60:00	120
4. Merger transactions involving foreign organizations, 12 CFR 303.185(b) and 12 CFR 303.62 (Mandatory)	Reporting (On Occasion)	1	1	06:00	6
5. Filings by insured state nonmember banks to invest in, or divest its interest in, a foreign organization, 12 CFR 303.183 (Mandatory)	Reporting (On Occasion)	1	1	02:00	2
6. Notice of foreign divestiture of foreign organization, 12 CFR 303.183(d) (Mandatory)	Reporting (On Occasion)	1	1	01:00	1
7. Document policies and procedures for supervision of foreign activities, 12 CFR 347.116 (Mandatory)	Recordkeeping (Annual)	6	1	400:00	2,400
Total Annual Burden (Hours):					2,571
Source: FDIC.

Summary of Hourly Burden Cost Estimate (OMB No. 3064-0125)
Information Collection (Obligation to Respond)	Hourly Weight (%)	Percentage Shares of Hours Spent by and Hourly Compensation Rates for each Occupation Group (by Collection)						Estimated Hourly Compensation Rate
		Exec. & Mgr. ($132.1)	Lawyer ($163.63)	Compl. Ofc. ($63.78)	IT ($101.32)	Fin. Anlst. ($99.85)	Clerical ($37.34)
1. Notices or applications to establish, move, or close a foreign branch, 12 CFR 303.182 (Mandatory)	0.08	50	50	0	0	0	0	$147.87
2. Filings for authorization for foreign branch to engage in activities other than those permitted under 12 CFR 347.115, 12 CFR 303 (Mandatory)	1.56	75	25	0	0	0	0	$139.98
3. Filings to invest in foreign organizations, or to engage in certain activities through foreign organizations, 12 CFR 303.183(b) and 303.121, (Mandatory)	4.67	83	17	0	0	0	0	$137.46
4. Merger transactions involving foreign organizations, 12 CFR 303.185(b) and 12 CFR 303.62 (Mandatory)	0.23	67	33	0	0	0	0	$142.50
5. Filings by insured state nonmember banks to invest in, or divest its interest in, a foreign organization, 12 CFR 303.183 (Mandatory)	0.08	50	50	0	0	0	0	$147.87
6. Notice of foreign divestiture of foreign organization, 12 CFR 303.183(d) (Mandatory)	0.04	100	0	0	0	0	0	$132.10
7. Document policies and procedures for supervision of foreign activities, 12 CFR 347.116 (Mandatory)	93.35	75	12.5	0	0	0	12.5	$124.20
Weighted Average Hourly Compensation Rate:								$125.15
Source: Bureau of Labor Statistics: 'National Industry-Specific Occupational Employment and Wage Estimates: Industry: Credit Intermediation and Related Activities (5221 And 5223 only)' (May 2021), Employer Cost of Employee Compensation (March 2021), and Employment Cost Index (March 2021 and June 2022). Standard Occupational Classification (SOC) Codes: Exec. And Mgr = 11-0000 Management Occupations; Lawyer = 23-0000 Legal Occupations; Compl. Ofc. = 13-1040 Compliance Officers; IT = 15-0000 Computer and Mathematical Occupations; Fin. Anlst. = 13-2051 Financial and Investment Analysts; Clerical = 43-0000 Office and Administrative Support Occupations.
Note: The estimated hourly compensation rate for a given collection is the average of the hourly compensation rates for the occupations used to comply with that collection, weighted by the share of hours spent by each occupation. The weighted average hourly compensation rate is the average of the estimated hourly compensation rates for all information collections, weighted by the share of hourly burden for each collection. These hourly weights, calculated as the estimated number of annual burden hours in a given collection over the total estimated number of annual burden hours across all collections, are shown in the “Hourly Weight” column of this table.

Total Estimated Cost Burden (OMB No. 3064-0125)
Information Collection Request	Annual Burden (Hours)	Weighted Average Hourly Compensation Rate	Annual Respondent Cost
Foreign Banking and Investment	2,571	$125.15	$321,761
Total Annual Respondent Cost:			$321,761
Source: FDIC.

13. Estimate of start-up costs to respondents:

None.

14. Estimate of annualized costs to the government:

None.

15. Analysis of change in burden:

There is no change in the substance or methodology of this information collection. The hourly burden has decreased by 1,601 hours from 4,172 hours to 2,571 hours. The change is due to a decrease in the number of respondents. The hourly burden per response remains the same.

16. Information regarding collections whose results are planned to be published for statistical use:

The information collected is for internal FDIC use only and is not published.

17. Display of expiration date:

This information collection involves recordkeeping requirements only. The expiration date of the information collection is readily available at www.reginfo.gov¹

18. Exceptions to certification:

None.

B. COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS

Not applicable.

1 https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=201703-3064-003

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