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Home > Statistics > Explanatory Notes - Banks in the United Kingdom: non-resident direct investment - levels
 

Explanatory Notes - Banks in the United Kingdom: non-resident direct investment - levels

Overview

This table contains level of direct investment in certain countries by UK banking sector institutions in their non-resident branches, subsidiaries and associates (outward investment) and direct investment capital and current transactions in UK banking sector institutions by non-resident incorporated head offices, parent companies or companies holding an associate interest (inward investment).

The direct investment levels are measured at end year book value. Investment stocks in currencies other than sterling are translated into sterling at the middle market spot rate ruling at end year. 

Availability

Data are available from 1998. Publication of data will usually occur annually on the last working day of October. The level of geographic breakdown shown is broadly consistent with ONS requirements; data for other countries may be supplied on request.  A full country analysis cannot be published due to confidentiality constraints.

Sources

These data are reported annually on the Forms FI and FO.

Revisions

All data are subject to revision if and when new information becomes available.  For more information on revisions practices see the Explanatory Note on revisions.

Definitions

Direct investment in branches is a measurement of injections of working capital which is invested in fixed assets.

Direct investment in subsidiaries and associates is defined by a holding of 10 % or more of the shares of, or a significant influence over a non-resident company.

Ordinary shares are defined as an institution's paid-up equity share capital, including voting and non-voting ordinary shares and deferred shares.

Loan capital and preference shares include bonds, debentures, loan stocks, and floating rate notes; as well as cumulative, participating, redeemable and convertible preference shares.

Other capital funds and reserves are the capital reserves and retained profits attributable to the direct investor. For subsidiaries working capital comprises only the value of equipment provided free of charge by the direct investor.

Subordinated bond issues are funds subordinated by the UK parent, which are derived from loan stocks issued by a non-resident subsidiary of the UK reporting institution.

Direct investment levels in subsidiaries and associates is measured by investments in ordinary shares, loan capital and preference shares, other capital funds and reserves, and working capital. In outward investment, subordinated bond issues by a non-resident subsidiary, the proceeds of which are passed to the parent bank in the UK, are deducted from the latter's investment in the non-resident subsidiary and appear in the table as negative direct investment abroad. This treatment conforms to international practice. Prior to 2000 the value of these investments was estimated. From 2000 onwards these data were collected as part of the annual enquiry.

The total stock of outward and inward investment is the sum of branches' working capital, subsidiaries' net direct investment, and associates' total direct investment.

Valuation and Breaks

Data are collected on an accruals accounting basis.  The data are presented according to the guidelines in the International Monetary Fund’s (IMF) Balance of Payments Manual (fifth edition) The data are therefore compatible with the data published by the Office for National Statistics (ONS).  However, the ONS banking sector data may include estimates for data that were not collected on the Bank of England forms and other adjustment. 

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