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

Board of Governors of the Federal Reserve System

Instructions for Preparation of

Annual Daylight Overdraft Capital Report for
U.S. Branches and Agencies of Foreign Banks
Reporting Form FR 2225

REPORTING INSTRUCTIONS FOR THE

Annual Daylight Overdraft Capital Report for
U.S. Branches and Agencies of Foreign Banks
FR 2225

General Instructions
Who Should Report - The FR 2225 is required for
foreign banking organizations (FBOs) that are ranked
SOSA 11 or SOSA 2 or hold a financial holding company
(FHC)2 designation and that wish to establish a non-zero
net debit cap for their U.S. branches and agencies.
If an FBO has more than one U.S. branch or agency, the
office designated to handle daylight overdrafts for the
bank in accordance with the Federal Reserve’s payments
system risk (PSR) policy would report to its Administrative Reserve Bank3 on behalf of the foreign bank family.
For this purpose, the term ‘‘foreign bank family’’ is
defined as all U.S. branches and agencies of the same
foreign bank.
Use of the Report and Definitions - For the purpose of
calculating an FBO’s net debit cap for the Federal
Reserve’s PSR policy, an FBO’s administrative Reserve
1. The Strength of Support Assessment (SOSA) ranking is composed of
four factors, including the FBO’s financial condition and prospects, the
system of supervision in the FBO’s home country, the record of the home
country’s government in support of the banking system or other sources of
support for the FBO; and transfer risk concerns. Transfer risk relates to the
FBO’s ability to access and transmit U.S. dollars, which is an essential
factor in determining whether an FBO can support its U.S. operations. The
SOSA ranking is based on a scale of 1 through 3, with 1 representing the
lowest level of supervisory concern.
2. The Gramm-Leach-Bliley Act (Public Law 106-102, 113 Stat. 1338
(1999)) defines a financial holding company as a bank holding company
that meets certain eligibility requirements. In order for a bank holding
company to become a financial holding company and be eligible to engage
in the new activities authorized under the Gramm-Leach-Bliley Act, the
Act requires that all depository institutions controlled by the bank holding
company be well capitalized and well managed. With regard to a foreign
bank that operates a branch or agency or owns or controls a commercial
lending company in the United States, the Act requires the Board to apply
comparable capital and management standards that give due regard to the
principle of national treatment and equality of competitive opportunity.
3. The Administrative Reserve Bank is responsible for daylight overdraft monitoring and counseling.
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General Instructions June 2014

Bank must first determine the FBO’s U.S. capital equivalency. U.S. capital equivalency is the amount that the
Board of Governors of the Federal Reserve System has
determined may be used by an FBO’s U.S. branches and
agencies as the equivalent capital measure for U.S.
chartered depository institutions. For FBOs that are
FHCs or are ranked SOSA 1 or SOSA 2 and wish to
establish a non-zero net debit cap for their U.S. branches
and agencies, U.S. capital equivalency is a fraction of the
capital base reported as Item 3. FBOs that are ranked
SOSA 3 and wish to establish a non-zero net debit cap for
their U.S. branches and agencies will have their U.S.
capital equivalency based on their ‘‘Net due to related
depository institutions’’ as reported on the Report of
Assets and Liabilities of U.S. Branches and Agencies of
Foreign Banks (FFIEC 002), Schedule RAL, Item 5.a,
Column A, for the most recent quarter.
When to Report - This report is due 90 days after the
bank’s fiscal year-end in order to maintain its net debit
cap.
In addition to the fiscal year-end filing, banks may
complete the report at anytime (whether or not it coincides with the annual reporting period) if their bank’s
capital figure has changed materially, or if they wish to
change their reporting option. Otherwise, the capital
figure most recently reported will continue to be used
until 90 days after the end of the fiscal year for calculating the net debit cap for the foreign bank family.
Where to Report - The U.S. office designated to handle
daylight overdraft matters for the foreign bank family
should submit this report to its Administrative Federal
Reserve Bank responsible for daylight overdraft monitoring and counseling.
Does the FBO request confidential treatment for any
portion of the report? - Once submitted, a reporter’s RR
Y- 2225 report becomes a Federal Reserve Board (Board)
record and is available to the public upon request on an
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General Instructions

individual basis pursuant to the Freedom of Information
Act, 5 U.S.C. §552 (FOIA). FOIA provides that Board
records generally must be disclosed in response to a
FOIA request, though records containing categories of
information are exempt from disclosure in whole or in
part.
The exempt categories include trade secrets, privileged
or confidential commercial or financial information, and
information that if disclosed would constitute a clearly
unwarranted invasion of personal privacy. A reporting
FBO may request confidential treatment for portions of
the report if the FBO is of the opinion that disclosure of
certain financial information in the report would likely
result in substantial harm to its (or its subsidiaries’)
competitive position.
To request confidential treatment, submit a letter concurrent with submission of the FR 2225. The letter must
discuss the legal justification for the request and must
describe the specific nature of the harm that would result
from disclosure of the information. Unsupported conclusory statements that disclosure will cause competitive
harm or is an invasion of privacy are insufficient to
justify confidential treatment. In addition, label as ‘‘Confidential’’ each item for which confidential treatment is
sought and submit under a separate cover page marked
‘‘Confidential.’’
If a determination is made to release any of the confidential information pursuant to a judicial order or other
determination, the Federal Reserve Bank will inform the
FBO prior to release of the information. For further
information, consult the Board’s Rules Regarding Availability of Information, 12 CFR part 261, including
12 CFR § 261.15, which governs requests for confidential treatment.
Foreign exchange conversion rate used in calculating
Item 1.a. and Item 4. - For major currencies, the
exchange rate to be used for this conversion is the rate
quoted by the Federal Reserve Board of Governors, or
some other consistent series of exchange rate quotations.
(If deposits are issued in a currency basket, consistent
series of exchange rate quotations either from the basket
unit of for the corresponding individual exchange rates
may be used.)

ITEM INSTRUCTIONS
Item 1.a. Amount of worldwide capital of the reporting bank (in U.S. dollars--based on the exchange rate
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as of the date of the financial statement) - Enter the
U.S. dollar equivalent of the worldwide capital of the
reporter’s foreign bank. (If the reporter’s foreign bank, in
turn, is owned by another bank or nonbank, use only the
reporting bank’s capital.) A foreign bank that meets the
criteria indicated in the ‘‘Use of the Report and Definitions’’ section may choose EITHER of the options listed
below. (The first is smaller but may be easier to report.)
A foreign bank that does not meet the criteria must
choose the ‘‘Equity Only’’ option.
Item 1.b. Reporting option (One of the following
two options must be chosen):
Equity Only - The amount of foreign bank tangible
equity capital (or comparable figure for governmentowned banks) as published in the bank’s most recent
annual, semi- annual, or quarterly reports (as appropriate)
or, if the bank does not release such figures to the public,
as submitted to the home-country supervisory authorities.
For this purpose, the term ‘‘tangible equity capital’’
includes common stock, preferred stock, surplus, undivided profits, contingency and other capital reserves (or
the home-country version of these balances). However, it
does NOT include any valuation reserves. All goodwill,
other intangibles, and any deferred losses that are included
in its total assets must be deducted. This item is equivalent to core capital under the Basle Capital Accord.
OR
Total Qualifying Capital - The amount qualifying
for total capital (Tier I plus Tier II) under the Basle
Capital Accord in the foreign bank’s home country (or its
equivalent as described in the section ‘‘Use of the Report
and Definitions’’). For either option the foreign bank
family should be willing and able to document the value
reported in Item 1.a. to U.S. bank examiners.
Item 2. Less: Adjustments to avoid double counting
- Enter the total amount of capital included in Item 1.a. of
this report that was used by any direct or indirect
subsidiary of this bank to calculate its own net debit cap.
The value should equal the foreign bank’s carrying value
of its investments in such subsidiaries. The amount
entered in Item 2 relates to only majority-owned subsidiaries of this reporting bank that have their own U.S.
offices that incur overdrafts. Types of subsidiaries covered by this adjustment include:
FR 2225
General Instructions June 2014

General Instructions

1. U.S. commercial or savings bank or savings association, including any Edge or Agreement Corporation majority owned by that U.S. subsidiary and
consolidated in its financial statements;
2. Edge or Agreement Corporation owned directly by
this reporting foreign bank (i.e. not owned through
a subsidiary U.S. bank); and
3. Non-U.S. bank that has a U.S. branch or agency
office or an Edge or Agreement Corporation subsidiary of its own.
The purpose of this adjustment is to avoid double counting of capital figures for banking organizations with more
than one entity participating directly on Fedwire. Accordingly, the intent of this adjustment is to subtract only the
amount of capital of such other participating entities that
is included in Item 1.
Item 3. Equals: Daylight overdraft capital base for
the U.S. branch and agency family - Subtract Item 2
from Item 1.a. and enter the amount on Item 3. This
amount is the worldwide capital base of the foreign
bank that is used to calculate the net debit cap for the
foreign bank family.
Item 4. Amount of worldwide total assets of the
reporting bank (in U.S. dollars--based on the exchange

FR 2225
General Instructions June 2014

rate as of the date of the financial statement) - Enter
the worldwide total assets of the reporter’s foreign bank,
on either a consolidated or combined basis, as of the date
of the financial statement from which the capital figure
reported in Item 1 was derived. This figure should be
consistent with the definition of worldwide assets used in
the instructions for the Annual Report of Foreign Banking Organizations (FR Y-7) Item 4, Section C. This
figure must:
1. use either a consolidated or a combined basis;
2. include the total assets of all companies in which
the foreign bank owns 50 percent or more of the
voting shares; and
3. include the total assets of companies in which the
foreign bank owns 25 percent or more of the voting
shares if all such companies are included.

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