Form Ffiec 009 - Country Exposure Report Page 20
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36FFIEC 009
upon relevant state and national laws, they should be
ation, or otherwise has a legally binding commitment.
treated not as ‘‘comfort’’ letters but, indeed, as guaran-
Include cross-border underwriting commitments when
tees.) Insurance policies that cover specific assets and
the customer accepts the commitment offered by the
that guarantee payment if the borrower defaults or if
banking institution. Exclude ‘‘best efforts’’ letters and
non-convertibility occurs for any reason should be
letters in which the pricing is indicative and not deter-
treated as guarantees. The term ‘‘guaranteed’’ also cov-
mined until launch date because the banking institution
ers collateralized claims if the collateral is (a) tangible
does not become legally committed until launch date
and liquid, including readily-marketable shares of stocks
(i.e., after price is finally determined and agreed with the
or bonds and (b) is both held and realizable outside of
customer). The term ‘‘best efforts’’ refers to letters issued
the country of residence of the borrower. In cases involv-
by the banking institution whereby it agrees to try to
ing collateral, the residence of the ‘‘guaranteeing’’ party,
sell a certain volume of assets at a desired price. If the
for purposes of the report, is the country in which the
market rejects the desired price, the banking institution
collateral is held unless the collateral is stocks or bonds,
has no commitment to buy the assets for its own account.
in which case it is the country of residence of the party
In case of commitments for syndicated loans, report
issuing the security. If the collateral consists of a basket
only the bank’s proportional share of the commitment.
of convertible currencies or investment grade securities
Similarly, contractual underwriting commitments (e.g.,
of different countries, the exposure may be reported on
revolving underwriting facilities) and other bond under-
the ‘‘Other’’ line (for example, ‘‘other Latin America’’)
writing agreements may be shown net of firm commit-
that most closely represents the geographical composi-
ments from other parties to purchase the assets without
tion of the basket. Assets such as real estate and accounts
recourse within a short and specific period of time.
receivable are not liquid or tangible assets. Although
Accordingly, the respondent should also include its obli-
only liquid, tangible and readily realizable assets may be
gations to participate in syndicated loans and underwrit-
listed in columns 8 through 10 and columns 11 through
ings managed by other institutions.
13, the Federal banking agencies will consider the pro-
tection afforded by other assets to the reporting bank’s
F. Trade Financing
country exposure claims when appraising each bank’s
country exposures.
Report in column 21 total extensions of credit with
maturities one year and under that are included in col-
D. Shipping Credits
umns 4 and 15 and that: (1) are directly related to
imports or exports and (2) will be liquidated through the
Shipping credits should be allocated in columns 1–3 to
proceeds of international trade. Provided these two con-
the country in which the primary source of repayment
ditions are met, such extensions of credit may include
resides. In cases where there is no long-term charter,
customers’ liability on acceptances outstanding, own
such as a vessel operating in the spot market or a liner
acceptances discounted, acceptances of other banks pur-
vessel, the allocation should be to the country of resi-
chased, pre-export financing where there is a firm export
dence of the ultimate shipowner.
sales order, commercial letters of credit, as well as other
Exceptions may be made where it is judged that the
loans and advances whenever such extensions directly
source of repayment of the credit may be other than in
relate to international trade.
the country of residence of the ultimate shipowner.
Where a shipping credit is repayable principally from the
G. Foreign-office Local Country Activities
proceeds of the charter assigned to the bank, the alloca-
tion should be to the domicile of the charter.
For purposes of this report, ‘‘foreign-office local country
activities’’ cover claims (column 18) on residents of the
same country in which that office is domiciled and liabili-
E. Contingencies and Commitments
ties (column 19) of a foreign office that represent legal
Report only those commitments for which the respon-
liabilities solely of that foreign office. For example,
dent has charged a commitment fee or other consider-
deposits received in a foreign branch are assumed to be
Instructions for Preparation of Reporting Form FFIEC 009
009-5
December 1997
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