Explanatory Notes - Consolidated external claims and unused commitments of UK-owned banks and their branches and subsidiaries worldwide
OVERVIEW
AVAILABILITY
SOURCES
REVISIONS
DEFINITIONS
VALUATION
REGION AND COUNTRY DETAILS
FURTHER INFORMATION
This dataset covers the claims of all UK-owned banks, and their branches and subsidiaries worldwide, on all countries other than the UK. It can therefore be used to provide a ‘map’ of where the exposures of UK-owned banking groups lie. Claims of foreign-owned banks in the UK are excluded, as is all intra-group business. The amounts shown in these series are reported to the Bank of England in sterling terms and translated into US dollars.
Data are collected and made available on a quarterly basis, with a lag of approximately one quarter. The data are available in the form of a Statistical Release, in addition to their availability on the Statistical Interactive Database and their publication in table C4.2 of Monetary and Financial Statistics (BankStats). The published schedule of releases is available here.
The current dataset is available quarterly from Q4 2004, before which a similar dataset was published. The new dataset includes more detailed risk transfer data, which allows greater analysis of claims on an ultimate risk basis, and more comprehensive breakdowns of the data, both by sector and by classification. There are also some definitional differences between the datasets. These differences, and more details on the improvements to the consolidated dataset from Q4 2004, are provided in an article published in BankStats, available here.
These data are provided to the Bank of International Settlements (BIS), which combines them with the statistics of other reporting countries to produce a worldwide view of consolidated claims. These data are available for all reporting countries on the BIS website at www.bis.org/statistics/consstats.htm.
Data are collected from all UK-owned banking groups. Banks report directly to the Bank Of England on Form CE. All banks carrying out non-resident business are required to report this data, so the dataset has 100% coverage.
All data are subject to revision if and when new data become available. For more information on revisions practices see the Explanatory Note on revisions, available here.
Total foreign claims comprise cross-border claims plus local claims in foreign and local currency. This is shown on an ultimate risk and immediate borrower basis. Claims on an immediate borrower basis represent where the initial claim lies, but this does not necessarily provide an accurate picture of the real exposures of reporting banks, since the initial claim may be guaranteed by another entity operating in a different country or sector to the immediate borrower. Therefore, to build a more accurate picture of true exposures, data is collected on risk transfers, and is used to construct a measure of claims on an ultimate risk basis.
A risk transfer between countries or sectors occurs where the repayment of a claim is effectively guaranteed by residents of other countries or institutions in other sectors. Outward risk transfers show claims which arise when the borrower is a branch of a bank whose head office is located in a different country or operates in a different sector, or when a third party located in a different country or sector from the original borrower guarantees, under the terms of a formal, legal and irrevocable agreement, to repay the claim should the original borrower fail to do so. Outward risk transfers may also be reported when collateral is provided to offset the risk that the original borrower or lessee fails to repay and where credit derivatives are used to cover the financial risk of financial claims in the banking book. An inward risk transfer is reported to the country of residence of the guarantor and represents a contingent liability of those countries. This risk may be reallocated to a different sector to that in which the original borrower operates.
The total of inward risk transfers included in the table differs from the total of outward risk transfers. Part of the difference represents net cross border transfers of risks to or from the United Kingdom, including transfers of risk associated with Export Credit Guarantee Department (ECGD) backed lending to other countries. The remaining element represents where cash collateral is present, requiring an outward risk transfer to be reported without an associated inward risk transfer. Details of these transfers and a reconciliation with the risk transfers are provided in the footnotes to series VPQB4S93P and VPQB4S53P.
Claims on an Ultimate risk basis are calculated by:
Total foreign claims on an immediate borrower basis
Minus Outward Risk transfers
Plus Inward Risk transfers
Cross-border claims comprise external lending by UK offices of UK-owned banks in sterling and foreign currencies and cross border lending by UK-owned non-resident branches and subsidiaries in local and non-local currency, other than to the UK.
Local claims in foreign and local currency comprise lending by non-resident branches and subsidiaries of UK-owned banks to local residents in both non-local and local currency.
Lending to non-residents includes loans and advances, amounts receivable under finance leases, claims under sale and repurchase agreements, commercial bills, certificates of deposit and lending under ECGD bank guarantee. It includes securities issued by foreign government, foreign institutions (e.g. IBRD) and corporate institutions registered outside the UK (not including the reporting institution's own subsidiaries and associates outside the UK). In addition, it includes sterling and other currency acceptances given under facilities opened on behalf of non-residents.
Banking International Organisations are reported within the public sector rather than as banking sector institutions.
Maturities are classified by reference to the period remaining to maturity, not the original period of the loan. Any overdue repayments are included within the data for 'six months and under'.
Derivatives comprise all cross-border and local resident financial claims resulting from derivative contracts, independent of whether the contract is booked as off- or on-balance sheet. These are not included within total foreign claims.
Unused commitments are the unutilised portion of both binding contractual obligations and those commitments which reporting banks would regard themselves as obliged to honour under any circumstances. They comprise guarantees and other credit commitments. Only commitments which would qualify as a foreign claim on a non-resident, if utilised, are included. Unused commitments are not included within total foreign claims.
VALUATION
Financial claims in the form of loans and receivables originated by the bank (and not held for trading) as well as ‘held to maturity investments’ are valued at face value or amortised cost price, while ‘available for sale’ financial assets and financial assets held for trading are valued at market or fair values. This is largely consistent with the International Accounting Standards (IAS 39).
Financial claims resulting from derivative contracts are valued at market prices or fair values (i.e. current credit exposure calculated as the sum of all positive market values or fair values of derivative contracts outstanding after taking account of legally enforceable bilateral netting agreements) as this ensures consistency with the concept of ‘current credit exposure’ in the BIS OTC derivatives statistics.
Negative market values of derivative contracts are considered to represent financial liabilities and are therefore by definition excluded from the reporting of financial claims.
Contingent liabilities resulting from guarantees and credit commitments are valued at face value or the maximum possible exposure. This includes sales of credit default swaps that fall under guarantees which are reported at face value rather than mark to market.
Until they are written off, interest in arrears on financial claims and principal in arrears (including capitalised interest) are included in the data on financial claims.
Financial claims against which provisions have been made are normally reported as foreign assets at their gross value. However, accounting rules may require in certain instances that these claims be reported on a net basis if there is an identified loss. Both reporting conventions are therefore possible.
Although an asset which has been written off may still be a legally enforceable claim, these are excluded from the reported data as the process of writing-off can be seen as reflecting the judgment that the current or prospective price of the claim is zero (see write-offs section below). The same reporting convention is followed for reductions in claims due to debt forgiveness, i.e. cancellations of claims via contractual arrangements between debtors and creditors.
The net position of portfolio investments (including dealing portfolios) is included. Where this netting results in a net short position, this is deducted from any other claims in the column.
When the reporting institution acts as manager or co-manager of a loan financed by more than one institution, it reports only that part of the loan which it retains (i.e. its own participation). Other participants’ shares of the amount to be lent are not included. A reporting institution which buys all or part of a loan from another financial institution will report it’s holding as an advance to the borrower, and not as lending to the institution from which it has purchased the loan.
REGION AND COUNTRY DETAILS
REGION AND COUNTRY DETAILS
Some figures for individual countries may be omitted (indicated by ..) for reasons of confidentiality. These amounts which are generally small are, where possible, included in the area totals. The country groups are the same as those used by the Bank for International Settlements. Individual countries on which claims are very small are included in "other" countries in the geographical analysis. Totals may not be the sum of component parts due to rounding.
Regions
Developed European countries includes Andorra, Austria, Belgium, Cyprus, Denmark, Faeroe Islands, Finland, France, Germany, Greece, Greenland, Iceland, Italy, Liechtenstein, Luxembourg, Malta, Netherlands, Norway, Portugal, Republic of Ireland, Slovenia, Spain, Sweden, Switzerland and Vatican City State.
Total Developed Countries includes developed European countries, Australia, Canada, Japan, New Zealand and United States.
Offshore centres includes Aruba, Bahamas, Bahrain, Barbados, Bermuda, Cayman Islands, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Lebanon, Macao, Mauritius, Netherlands Antilles, Panama, Samoa, Singapore, West Indies UK and Vanuatu.
Developing Europe includes Albania, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Montenegro (from Q2 2007), Poland, Romania, Russia, Republic of Slovakia, Serbia (from Q2 2007), Serbia & Montenegro (to Q1 2007), Turkey, Ukraine.
Latin America and the Caribbean includes Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominica, Dominican Republic, Ecuador, El Salvador, Falkland Islands, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Paraguay, Peru, Saint Lucia, St Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands, Uruguay and Venezuela.
Africa and Middle East includes Algeria, Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Democratic Republic of Congo, Djibouti, Egypt, Equatorial Guinea, Eritrea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Iran, Iraq, Israel, Ivory Coast, Jordan, Kenya, Kuwait, Liberia, Libya, Lesotho, Madagascar, Malawi, Mali, Mauritania, Morocco, Mozambique, Namibia, Niger, Nigeria, Oman, Palestinian Autonomy, Qatar, Rwanda, Sao Tome and Principe, Saudi Arabia, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, St Helena, Sudan, Swaziland, Syria, Tanzania, Togo, Tunisia, Uganda, United Arab Emirates, Western Sahara, Republic of Yemen, Zaire, Zambia and Zimbabwe.
Asia and Pacific includes Afghanistan, Armenia, Azerbaijan, Bangladesh, Bhutan, British Overseas Territories, Brunei, Cambodia, Canton and Enderbury Islands, People's Republic of China, Fiji, French Polynesia, Georgia, India, Indonesia, Kazakhstan, Kirgizstan, Kiribati, Democratic People's Republic of Korea, Republic of Korea, People's Democratic Republic of Lao, Malaysia, Maldives, Mongolia, Myanmar, Nauru, Nepal, New Caledonia, Pakistan, Papua New Guinea, Philippines, Solomon Islands, Sri Lanka, Taiwan, Tajikistan, Thailand, Tonga, Turkmenistan, Tuvalu, US Trust Territories in the Pacific, Uzbekistan, Socialist Republic of Vietnam and Wallis and Fortuna Islands.
Countries
BritishOverseasTerritories includes British Antarctic Territory, British Indian Ocean Territory and Pitcairn Islands.
France includes French Guiana, French Southern Territories, Guadeloupe, Martinique, Monaco, Reunion and St Pierre and Miquelon.
United Arab Emirates includes Abu Dhabi, Dubai and Other United Arab Emirates.
United States includes US Virgin Islands.
West Indies UK includes Anguilla, Antigua and Barbuda, British Virgin Islands, Montserrat and St Christopher/St Kitts-Nevis.
'Former' countries
Claims against Former Czechoslovakia and Former Soviet Union are no longer collected. Any data that was previously reported against these countries is now reallocated to the appropriate successor country or to unallocated.
Claims against Former Yugoslavia are no longer collected. Any remaining data that was previously reported against Former Yugoslavia is now reallocated to the appropriate successor country or to unallocated. Serbia & Montenegro, which accounted for a large proportion of Former Yugoslavia figures, is shown separately from Q2 2004 until Q1 2007; thereafter Serbia is shown separately, while Montenegro is included in ‘Other’ within Developing Europe.
Countries not separately shown
Countries not identified will be grouped by region as "countries not separately identified". These groups will also include any data suppressed for confidentiality within the separately identified countries within that region. The countries within each group are:
Developed European countries not separately identified includes Faeroe Islands, Greenland and San Marino.
Offshore centres not separately identified includes Aruba, Samoa and Vanuatu.
Developing European countries not separately identified includes Belarus, Macedonia, Moldova and Montenegro (from Q2 2007).
African and Middle East countries not separately identified includes Benin, Burkina Faso, Burundi, Cape Verde, Central African Republic, Chad, Comoros, Congo, Democratic Republic of Congo, Djibouti, Equatorial Guinea, Eritrea, Gabon, Gambia, Guinea, Guinea-Bissau, Lesotho, Madagascar, Mauritania, Namibia, Niger, Rwanda, Sao Tome and Principe, Senegal, Sierra Leone, Somalia, St Helena, Swaziland, Togo and Western Sahara.
Asian and Pacific countries not separately identified includes Bhutan, Canton and Enderbury Islands, Fiji, French Polynesia, Georgia, Kirgizstan, Kiribati, Democratic People's Republic of Korea, People's Democratic Republic of Lao, Maldives, Mongolia, Myanmar, Nauru, New Caledonia, Papua New Guinea, Solomon Islands, Tajikistan, Tonga, Tuvalu, US Trust Territories in the Pacific and Wallis and Fortuna Islands.
Latin American and Caribbean countries not separately identified includes Dominica, Falkland Islands, Grenada, Guyana, Haiti, Nicaragua, Saint Lucia, St Vincent and the Grenadines and Suriname.
FURTHER INFORMATION
More detail on the use and availability of international banking statistics can be found in a BankStats article entitled 'Developments in UK international banking statistics'.
