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Basel II Capital Accord
Notice of Proposed Rulemaking (NPR)
Preamble - Paperwork Reduction Act Analysis
September 5, 2006 Skip repetitive navigation

Adoption of Common Appendix--Agency-Specific Text
Signature Pages
Paperwork Reduction Act Analysis

A. Request for Comment on Proposed Information Collection

In accordance with the requirements of the Paperwork Reduction Act of 1995, the agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The agencies are requesting comment on a proposed information collection. The agencies are also giving notice that the proposed collection of information has been submitted to OMB for review and approval.

Comments are invited on:

(a) Whether the collection of information is necessary for the proper performance of the agencies' functions, including whether the information has practical utility;

(b) The accuracy of the estimates of the burden of the information collection, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected;

(d) Ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information.

Comments should be addressed to:

OCC: Communications Division, Office of the Comptroller of the Currency, Public Information Room, Mail stop 1-5, Attention: 1557-NEW, 250 E Street, SW, Washington, DC 20219. In addition, comments may be sent by fax to 202-874-4448, or by electronic mail to You can inspect and photocopy the comments at the OCC's Public Information Room, 250 E Street, SW, Washington, DC 20219. You can make an appointment to inspect the comments by calling 202-874-5043.

Board: You may submit comments, identified by Docket No. R-1261, by any of the following methods:

· Agency Web Site: Follow the instructions for submitting comments on the

· Federal eRulemaking Portal: Follow the instructions for submitting comments.

· E-mail: Include docket number in the subject line of the message.

· FAX: 202-452-3819 or 202-452-3102.

· Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 20551.

All public comments are available from the Board's Web site at http:// as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room MP-500 of the Board's Martin Building (20th and C Streets, NW) between 9 a.m. and 5 p.m. on weekdays.

FDIC: You may submit written comments, which should refer to 3064-AC73, by any of the following methods:

· Agency Web Site: Follow the instructions for submitting comments on the FDIC Web site.

· Federal eRulemaking Portal: Follow the instructions for submitting comments.

· E-mail:

· Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, FDIC, 550 17th Street, NW, Washington, DC 20429.

· Hand Delivery/Courier: Guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7 a.m. and 5 p.m.

Public Inspection: All comments received will be posted without change to including any personal information provided. Comments may be inspected at the FDIC Public Information Center, Room 100, 801 17th Street, NW, Washington, DC, between 9 a.m. and 4:30 p.m. on business days.

A copy of the comments may also be submitted to the OMB desk officer for the agencies: By mail to U.S. Office of Management and Budget, 725 17th Street, NW, #10235, Washington, DC 20503 or by facsimile to 202-395-6974, Attention: Federal Banking Agency Desk Officer.

OTS: Information Collection Comments, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW, Washington, DC 20552; send a facsimile transmission to (202) 906-6518; or send an e-mail to OTS will post comments and the related index on the OTS Internet site at In addition, interested persons may inspect the comments at the Public Reading Room, 1700 G Street, NW, by appointment. To make an appointment, call (202) 906-5922, send an e-mail to, or send a facsimile transmission to (202) 906-7755.

B. Proposed Information Collection

Title of Information Collection: Risk-Based Capital Standards: Advanced Capital Adequacy Framework

Frequency of Response: event-generated

Affected Public:

OCC: National banks and Federal branches and agencies of foreign banks.

Board: State member banks, bank holding companies, affiliates and certain non-bank subsidiaries of bank holding companies, uninsured state agencies and branches of foreign banks, commercial lending companies owned or controlled by foreign banks, and Edge and agreement corporations.

FDIC: Insured nonmember banks, insured state branches of foreign banks, and certain subsidiaries of these entities.

OTS: Savings associations and certain of their subsidiaries.

Abstract: The proposed rule sets forth a new risk-based capital adequacy framework that would require some banks and allow other qualifying banks to use an internal ratings-based approach to calculate regulatory credit risk capital requirements and advanced measurement approaches to calculate regulatory operational risk capital requirements.

The information collection requirements in the proposed rule are found in sections 21-23, 42, 44, 53, and 71. The collections of information are necessary in order to implement the proposed advanced capital adequacy framework.

Sections 21 and 22 require that a bank adopt a written implementation plan that addresses how it will comply with the proposed advanced capital adequacy framework's qualification requirements, including incorporation of a comprehensive and sound planning and governance process to oversee the implementation efforts. The bank must also develop processes for assessing capital adequacy in relation to an organization's risk profile. It must establish and maintain internal risk rating and segmentation systems for wholesale and retail risk exposures, including comprehensive risk parameter quantification processes and processes for annual reviews and analyses of reference data to determine their relevance. It must document its process for identifying, measuring, monitoring, controlling, and internally reporting operational risk; verify the accurate and timely reporting of risk-based capital requirements; and monitor, validate, and refine its advanced systems.

Section 23 requires a bank to notify its primary Federal supervisor when it makes a material change to its advanced systems and to develop an implementation plan after any mergers.

Section 42 outlines the capital treatment for securitization exposures. A bank must disclose publicly that it has provided implicit support to the securitization and the regulatory capital impact to the bank of providing such implicit support.

Section 44 describes the IAA. A bank must receive prior written approval from its primary Federal supervisor before it can use the IAA. A bank must review and update each internal credit assessment whenever new material is available, but at least annually. It must validate its internal credit assessment process on an ongoing basis and at least annually.

Section 53 outlines the IMA. A bank must receive prior written approval from its primary Federal supervisor before it can use the IMA.

Section 71 specifies that each consolidated bank must publicly disclose its total and tier 1 risk-based capital ratios and their components.

Estimated Burden: The burden estimates below exclude the following: (1) any burden associated with changes to the regulatory reports of the agencies (such as the Consolidated Reports of Income and Condition for banks (FFIEC 031 and FFIEC 031; OMB Nos. 7100-0036, 3064-0052, 1557-0081) and the Thrift Financial Report for thrifts (TFR; OMB No. 1550-0023); (2) any burden associated with capital changes in the Basel II market risk rule; and (3) any burden associated with the Quantitative Impact Study (QIS-4 survey, FR 3045; OMB No. 7100-0303). The agencies are concurrently publishing notices, which will address burden associated with the first item (published elsewhere in this issue), and jointly publishing a rulemaking which will address burden associated with the second item. For the third item, the Federal Reserve previously took burden for the QIS-4 survey, and some institutions may leverage the requirements of the QIS-4 survey to fulfill the requirements of this rule.

The burden associated with this collection of information may be summarized as follows:


Number of Respondents: 52

Estimated Burden Per Respondent: 15,570 hours

Total Estimated Annual Burden: 809,640 hours


Number of Respondents: 15

Estimated Burden Per Respondent: 14,422 hours

Total Estimated Annual Burden: 216,330 hours


Number of Respondents: 19

Estimated Burden Per Respondent: 410 hours

Total Estimated Annual Burden: 7,800 hours


Number of Respondents: 4

Estimated Burden Per Respondent: 15,000 hours

Total Estimated Annual Burden: 60,000 hours