FR 2225

Annual Daylight Overdraft Capital Report for U.S. Branches and Agencies of Foreign Banks

Description: The FR 2225 report requests information needed to identify the foreign bank respondent and its fiscal year-end and to determine its capital and assets for purposes of daylight overdraft monitoring. The capital and assets items include the following: capital for the foreign bank parent, capital used by any direct or indirect subsidiary of the respondent that has its own net debit cap, the foreign bank's worldwide capital base calculation, the bank's worldwide assets, and the exchange rate used in the calculation.

OMB: 7100-0216

Purpose: The FR 2225 report provides the Federal Reserve with the foreign bank's worldwide capital figure, which, in connection with a net debit cap multiple, is used to calculate the bank's daylight overdraft limit.

Background: This report was implemented in March 1986 as part of the procedures used to administer the Board's Payments System Risk (PSR) Policy. Under the policy, all institutions that maintain a Federal Reserve account are assigned or may establish a net debit cap. The net debit cap represents a maximum limit on daylight overdrafts incurred in that account on a single day or on average during a two-week maintenance period. The net debit cap is calculated by applying a net debit cap multiple to a capital measure. For a U.S.-chartered institution, the net debit cap multiple is applied to risk-based capital. For U.S. branches or agencies of a foreign bank, the net debit cap multiple is applied to a consolidated U.S. capital equivalency measure. In 2000, as part of a broad review of its daylight credit policies, the Federal Reserve assessed the method of determining U.S. capital equivalency for foreign banking organizations. The review included analysis of trends in daylight credit, consideration of supervisory issues, analysis of new or emerging payments system initiatives, and discussions with an FBO. The revised PSR policy (1) eliminated the Basel Capital Accord criteria and replaced it with the strength-of-support-assessment (SOSA) rankings and financial holding company status in determining U.S. capital equivalency for an FBO, (2) raised the percentage of capital used in calculating U.S. capital equivalency for certain FBOs, and (3) revised the definition of an alternative measure for U.S. capital equivalency.

Respondent Panel: Foreign banking organizations that wish to establish a non-zero net debit cap and are ranked SOSA 1 or SOSA 2 or hold a financial holding company designation.

Frequency: Annually, within three months of the end of the foreign bank's fiscal year.

Public Release: The FR 2225 is a public report. Respondents may request confidential treatment for portions of the report.

Last Update: June 20, 2014