Form Ffiec 009 - Country Exposure Report Page 33
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36FFIEC 009
Example 2: Assume the respondent has a master netting
• Report the total net aggregate residual amount of 28 in
agreement. In addition, assume for illustrative purposes
column 4 for Japan. In reporting exposure to a bank
that netting is not enforceable in Hong Kong.
covered by a master netting agreement, the amount
reported in column 4 in the country of the head office
represents total exposure to the organization as a
Memo
whole, including amounts that may be payable only at
col 4
col 5
branches of the organization.
Japan .............................
449
0
• Should a sovereign event occur in Hong Kong prevent-
Hong Kong .....................
0
0
ing offices there from making payments outside Hong
UK ................................
0
0
Kong, it is assumed that US bank would most likely
net Japan bank’s transactions with its Hong Kong
• Aggregate the net residual amounts for the London,
branch and its transactions with Japan bank’s Hong
New York, and Tokyo offices of US bank and Japan
Kong branch and that the resulting net amount would
bank; that is, 38 + 33 − 18 − 75 + 1 + 50 − 85 + 80 = 24.
be paid (or received) in Hong Kong. A net gain at US
Contracts with US bank’s Hong Kong branch and
bank’s London branch with Japan Hong Kong (120), a
contracts with Japan bank’s Hong Kong branch are
net loss at its Tokyo branch with Japan Hong Kong
treated as though they were not subject to the netting
(−110), and the net loss at US bank’s Hong Kong
agreement. Report gross revaluation gains of 120 at
branch (−6) with all offices of Japan bank result in a
US Hong Kong, 190 at US London, and 115 at US
net exposure in Hong Kong of 4, which should be
Tokyo plus 24 in aggregate net amounts on other
reported in memorandum column 5 for Hong Kong.
contracts (449 total) in column 4 for Japan.
Example 4: Master netting, no exceptions. As in
• No amounts are required to be reported in memoran-
examples 2, and 3, reporting to columns 6 and 7 is not
dum column 5 because the master agreement between
appropriate.
US bank and Japan bank is assumed to obligate the
parties to meet the obligations of their respective
Memo
branches, even in jurisdictions where netting is not
col 4
col 5
enforceable.
Japan ...............................
28
0
• No amounts qualify as local country assets or liabili-
Hong Kong .......................
0
0
UK ..................................
0
0
ties to be reported in columns 6 or 7; contracts covered
United States .....................
na
na
by multibranch master agreements result in cross-
border claims or liabilities of the head office.
• Report the net positive residual amount of 28 in col-
umn 4 as exposure in Japan.
Example 3: Respondent has a master netting agreement,
Example 5: Same as example 4, except that parties have
but parties do not assume the cross-border risk in Hong
also agreed to a bilateral collateralization agreement
Kong; that is, they decline to guarantee payment of
under which exposures greater than 10 are collateralized
obligations of their Hong Kong branches outside of
with cash or highly liquid U.S. Government securities
Hong Kong. As in example 2, reporting in columns 6 and
held in New York. Assume that collateral is pledged in
7 is not appropriate.
minimum incremental amounts of 5.
Memo
Memo
col 4
col 5
col 4
col 5
Japan ...............................
28
0
Japan ...............................
8
0
Hong Kong .......................
0
4
Hong Kong .......................
0
0
UK ..................................
0
0
UK ..................................
0
0
United States .....................
na
na
United States .....................
na
na
Instructions for Preparation of Reporting Form FFIEC 009
009-18
December 1997
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