Reporting forms

FR Y-12

Consolidated Bank Holding Company Report of Equity Investments in Nonfinancial Companies

Description: This report collects information from certain domestic bank holding companies (BHCs) on their equity investments in nonfinancial companies on four schedules: Type of Investments, Type of Security, Type of Entity within the Banking Organization and Nonfinancial Investment Transactions During the Reporting Period.

OMB: 7100-0300

Purpose: The FR Y-12 report provides valuable supervisory information that permits examiners and other supervisory staff to monitor the ongoing growth and contribution to profitability of this increasingly active business line. For institutions active in this business line, regular reviews generally are conducted. The FR Y-12 serves as an important risk-monitoring device by allowing supervisory staff to monitor an institution's activity between examination dates. It also serves as an early-warning mechanism to identify institutions whose activities in this area are growing rapidly and that, therefore, may warrant special supervisory attention.

Background: The Gramm-Leach-Bliley Act of 1999 broadened the scope of permissible investments in nonfinancial companies. Bank holding company investments in nonfinancial companies increased significantly early in this decade. At their peak, these investments contributed significantly to earnings and capital at institutions actively involved in this business line. Equity investments also contributed to the volatility of earnings and capital and increased the risk profiles at some institutions. Thus, these investments present the potential for additional volatility and risk in portfolios of certain banking organizations. In January 2001, the Federal Reserve and the Treasury Department published a final rule on merchant banking investments made by financial holding companies. The rule stated that quarterly and annual reporting forms would be required; this report fulfills the quarterly reporting requirement discussed in the rule. The requirements were effective as of September 30, 2001. In 2005, the Federal Reserve revised the FR Y-12 reporting threshold to reduce regulatory burden and enhance the quality and consistency of information collected. Changes include: an added memorandum item to Schedule A to collect data on investments managed for third-parties; an added memorandum item to Schedule B to identify whether the BHC holds any warrants or similar instruments that can be used to acquire equity; elimination of three columns on Schedule C used to collect data on direct investments in public entities, direct investments in nonpublic entities, and all indirect investments; and added Schedule D ("Nonfinancial Investment Transactions During the Reporting Period") to collect cash flow and valuation change information on all equity investment activity of the BHC in nonfinancial companies during the reporting period.

Respondent Panel: The panel consists of top-tier domestic BHCs that file the FR Y-9C or FR Y-9SP and meet the reporting requirements stated in the instructions. This is a mandatory report.

Frequency: The report is collected as of the end of each calendar quarter for FR Y-9C filers and as of the end of June and December for FR Y-9SP filers. The report must be submitted to the appropriate Reserve Bank within forty-five calendar days after the as-of date.

Public Release: Individual respondent data are available to the public upon request through the appropriate Reserve Bank. Under certain circumstances, however, respondents may request confidential treatment. Data from the FR Y-12 are not published.

 
Last update: January 03, 2007