Frequently Asked Questions - All
This is a selection of the most frequently asked questions along with answers. The contents will be updated on an ongoing basis.
Monetary Statistics: If you require any further assistance on this subject please contact us.
Growth Rates :
Q. How does the Bank calculate longer-run growth rates.
When I calculate the growth rate from one month's level to the
next I get a different answer to the published one?
A. A flow for each period (i.e. month) is produced, usually
by calculating the difference between the opening and closing
levels and then excluding the effects of any breaks in series,
changes in value etc. The growth rate for the reporting period
is then calculated as this flow divided by the opening level.
The three, six and twelve-month rates are calculated by concatenating
the one-month rates, (rather than dividing the flow for these
longer periods by the opening level) to avoid distortions where
there are breaks in the series. The formulae used in these calculations
can be viewed in the explanatory notes to Bankstats.
Lending to Individuals
Q. When the Bank footnotes a Lending to Individuals
series to the effect that a portfolio of loans has been transferred
between a reporter and a non-resident, does this mean that the
published numbers over/understate the true positions.
A. No. When such a transfer takes place the flows are adjusted
to remove the effect of the transaction such the published data
reflect, more accurately, true lending flows.
Q. Do the Bank publish data on the ratio of household
debt to disposable income?
A. The Bank does not publish these data on a routine basis,
but may make use of them in some of its publications, for example
the Financial Stability Review. When used the authors may make
the data available on request.
Q. Does the Bank publish data on consumer delinquencies
or consumer loan defaults.
A. The Bank does not produce data on loan delinquencies or defaults,
but does produce data on 'write-offs and other revaluations
of loans by banks' for credit card and other unsecured lending
to individuals. These are covered in Table C2.1 of our monthly
publication Monetary & Financial Statistics (Bankstats).
Q. Does the Bank publish data on the average loan size
for mortgages in the UK?
A. The Bank does not publish such data.
Q. Does the Bank publish a series measuring the estimated
amount of outstanding of MEW?
A. No. The Bank’s estimate of MEW is intended to measure
that part of secured borrowing that is not invested in the housing
market. It takes the increase in housing finance (net mortgage
lending and capital grants) and subtracts households’
investment in housing (purchases of new houses and houses from
other sectors, improvements to property, and the transactions
costs of moving house). Therefore, MEW is not regarded in stock
terms and hence a levels series does not exist.
Q. Why is the number of Mortgage Approvals lower than
the number of housing transactions (measured by Land Transaction
Returns) taking into account that there is a lag between the
two?
A. Not all house purchases require a mortgage, for example when
someone who has paid off their mortgage moves house. This would
score as a transaction but no mortgage approval would have been
made. Recent estimates by the ONS are that only around three
quarters of house purchases are financed with mortgages.
Monetary Aggregates
Q. Can the Bank of England provide M1 statistics?
A. M1 comprised of notes and coin held by the private sector
plus the private sector's non-interest-bearing deposits and
interest-bearing sight deposits held with banks. Since the conversion
of building societies to banks, this statistic has become less
useful and production of it has subsequently ceased.
Users who are looking for a similar statistic are advised to
use M2, the retail component of M4. This comprises of notes
and coin held by the private sector, plus the private sector's
'retail' deposits held with banks and building societies. Banks'
retail deposits are those where the depositor accepts an advertised
rate of interest (including nil) while building societies' retail
deposits include all shares held and deposits made by individuals.
These data can be found in Monetary and Financial Statistics
tables A2.2.1 and A2.2.2, and long runs are available from the
Statistical Interactive Database.
Terminology
Q. Does the Bank publish explanations of the various
terms used in its statistical publications?
A. Definitions for all terms used in the statistical publications
can be found in the explanatory notes of Bankstats.
Banks Income and Expenditure: If you require any further assistance on this subject contact us
Q. Which banks data are included in the Income and
Expenditure data?
A. Data are collected from all UK resident banks at least once
a year.
Q. Where can I find economic data collected from sectors
of the economy other than banks?
A. The Office of National Statistics collect data from other
economic sectors and publish all economic data except that collected
solely from banks.
Q. Does the Income and Expenditure data contain information
on all the activities of banks?
A. It includes data for the banking legal entities but not other
legal entities of banking groups such as investment management
and insurance subsidiaries.
Q. Does the Income and Expenditure data contain information
on all the revenues of banks?
A. It only included selected revenue streams such as interest
and fees that are used for the purposes of compiling economic
statistics until the introduction of a new reporting form at
the beginning of 2004. This now includes all items in order
to make it easier for banks to reconcile the data to the usual
format for their published accounts. Data collected for the
first time from 2004 is not yet published and additional data
publication will be reviewed in the early part of 2005. In the
meantime if you have any particular request please contact us.
Reserves: If you require any further assistance on
this subject contact us
Q. Where do the Bank of England's holdings of foreign
currency and gold arise from? Are they part of the UK 's official
holdings of international reserves?
A. Part of the Bank of England's holdings arise from foreign
currency and gold deposits placed with the bank by non-resident
central banks and other customers as part of their routine banking
relationship with the Bank.
Other assets include capital items together with net claims
on other central banks arising from participation in the target
system, foreign currency forwards, swaps and repos.
The Bank of England's holdings are not part of the UK's official holdings of International Reserves.
Financial Derivatives: If you require any further assistance
on this subject contact us
Q. Can changes in business volumes be measured from
the series on financial derivatives?
A. The aggregate figures for banks’ gross positions are
at market values. This means that there are both volume and
price factors affecting the published aggregates. Unfortunately
it is not possible to identify changes in volumes of the range
of derivatives products for which gross data are compiled and
published.
Q. Are data available on derivatives contracts in terms
of the underlying nominal values?
A. Banks report a single figure for all derivatives contracts
outstanding by nominal value, converted into sterling, without
any breakdown of product and / or risk type. Users who wish
to assess the growth of derivatives usage, in nominal terms,
are recommended to access the information on global OTC derivatives
published by the Bank for International Settlements.
Q. Is there any simple explanation for the apparent
volatility over time of the derivatives totals by product type?
A. The published data on banks’ gross positions since
1998 reveal underlying growth trends, notably in options and
swaps. Part of the answer to the fluctuations observed over
the shorter term may be that some of the trading stimulus in
derivatives markets is connected to the general degree of uncertainty
in financial markets. When exchange rates and/or official interest
rates are significantly stable, anecdotal information suggests
that there is less need, per se, to enter into hedging or other
trading strategies. Conversely, when markets are volatile, and
there is a lack of market consensus as to future trends, there
is scope for maximising future profit opportunities out of increased
derivatives activity when spreads are widening.
The contrast between peaks and troughs in market values may
be exacerbated to some extent by the nature of OTC derivatives.
A trader who seeks to match or offset an exposure represented
by an existing OTC contract will engage in further OTC contracts
in order to transfer the risk.
Quoted Interest Rates and Banks’ Average Interest
Rates: If you require any further assistance on this subject
contact us
Q. Why do rates for the same instrument in Bankstats
Table’s G1.3 and G1.4 differ?
A. Differences arise between apparently equivalent series because
of different coverage, source data and methodology. A summary
is given below; more details are available in the explanatory
notes.
The quoted interest rates in Table G1.3 are calculated from
published rates for a sample of banks/building societies across
a range of different deposit and lending products. For each
product, individual lenders rates are weighted according to
their market share. The end result is a weighted average quoted
rate.
Banks’ average interest rates (Table G1.4) are compiled from a sample of banks that complete a monthly banking return. Average daily balances and accrued interest flows are provided for the whole of banks’ deposit and lending business, broken down by sector and instrument. From this an annualised rate is calculated. The end result is a weighted average rate which covers all products available (stock and new business).
Interest and Exchange Rates:
Q. How do I find the USD/£ rate?
A. Look at the Spot Exchange Rates on the Statistical Interactive
Database.
Q. What is the difference between the spot and effective
exchange rates?
A. Spot exchange rates are one value against another, ie £1
= $1.87
An Effective Exchange rate is a measure of the value of a currency
against a trade-weighted ‘basket’ of other currencies,
relative to the base date. It is calculated as a weighted, geometric
average, expressed in the form of an index.
Q. Where can I find the yield curve data on your website?
A. There is a separate link on the Statistics main page (estimates
of UK Yield curves).
Q. Can you tell me what the Bank of England ‘interest
rate’ was in 1970?
A. There is a link to a separate spreadsheet showing the official Bank Rate going back to 1694 on the Statistics main page.
Q. Do we collect all currencies in our exchange rates
data?
A. No, we only collect a certain few, mainly the most commonly
used.
Q. Are you also responsible for updating Bloomberg with
hourly exchange rate data?
A. No, the only data we receive is from our dealers during the
late afternoon, which we update on the Statistical Interactive
database with at 9.30 the following day.
Statistical Reporting & Cash Ratio Deposits: If
you require any further assistance on this subject contact us.
Q. Who has to report?
A. Any institution that has permission to accept deposits, under
Part IV of the Financial Services and Markets Act 2000 (FSMA)
or are inwardly passporting EEA credit institutions which have
permission to accept deposits through a UK branch.
Q What do I have to report?
A What you report is dependent on the size and type of business;
the reporting thresholds can be found here. As a general guide
all institutions have to report Form BT (at least quarterly),
Form PL (at least annually), and annual forms BG, HI and HO.
Institutions will be informed, in writing by the Bank, of their
statistical reporting requirement once permission to accept
deposits has been granted by the Financial Services Authority.
Q When do I have to report?
A Your first balance sheet data (Form BT), will be required
at the first month-end after permission has been granted (or
first quarter-end if appropriate).
A reporting schedule for statistical returns can be found here.
Q How can I send the data?
A Electronic reporting is our preferred method of data capture
(further details about electronic reporting can be found here.
However, paper returns can be accepted and excel versions of
all forms can be found here but please note paper returns must
be submitted to earlier deadlines than electronic reporting
(reporting schedule can be found here
Q What are Cash Ratio Deposits?
A Cash ratio deposits (CRDs) are non-interest bearing deposits
lodged with the Bank of England by eligible institutions (ie.
banks and building societies), who have reported average eligible
liabilities (ELs) of over £500 million over a calculation
period. The level of each institution’s CRD is currently
calculated twice-yearly (currently in May and November) at 0.15%
of average ELs, over the previous six end-calendar months, in
excess of £500mn.
Q What are CRDs used for?
A The interest earned from the deposits is used by the Bank
towards funding its operations.
Q Is my institution eligible to pay a CRD?
A All institutions who submit balance sheet data to the Bank
(as well as building societies who currently submit data to
the Bank via the FSA) are eligible to pay a CRD, but only those
whose average, over a six month calculation period, eligible
liabilities (BT item £46) is in excess of £500mn
will be called up on to do so.
Q What are eligible liabilities?
A In broad terms, these comprise of sterling deposit liabilities,
excluding deposits with an original maturity of over two years,
plus any sterling resources obtained by switching foreign currencies
into sterling. Interbank transactions (excluding cash ratio
and special deposits with the Bank of England) are taken into
the calculation of an individual institution’s eligible
liabilities on a net basis, irrespective of term, except for
unsubordinated capital market instruments with a maturity of
five years or more (more than five years from 1992) which are
not taken into account. Adjustments are also made in respect
of transit items and liabilities and claims under sale and repurchase
agreements.
International Financial Reporting Standards (IFRS):
If you require any further assistance on this subject contact
us.
Q. Under IFRS banks will include a value for holdings
of intangible assets (in house software developments, brandnames,
customer lists, licences etc.) to their balance sheets. Should
this be reported on Form BT, and if so where ?
A. As stated under point 5. in Statistical Notice 2005/01,
"Item 35B on the Form BT (fixed assets, commodities owned
etc) should also record banks' holdings of intangible assets.
The following clarification has been made to the definitions:
'These consist of land, premises, equipment, vehicles, commodities
(including silver), intangible assets and other assets owned
or recorded as such by the reporting institution'."
Q Banks may have deposits which were deemed dormant
(taken to profit) which will have to be restated as deposits
under IFRS. How should this process be captured on form BT and
associated statistical balance sheet forms?
A The dormant accounts will need to be reported on the BT, BE,
AD, and QX in the same way as all other deposit accounts. The
Bank will need to be informed of the amounts involved and their
sectorisation preferably before the amounts are added to the
balance sheet, but, at the latest, as the form BT is submitted.
Please email us
Q IFRS implementation brings pension accounting in to
the profit and loss account, and on to the balance sheet. Where
should the expenditure and liability (or asset) for pension
obligations recognised under IFRS be reported?
A For balance sheet data, the liability (or asset) should be
reported on the form BT in item 19CD - "Capital and other
internal accounts" and on Form QX in item 19CD5 - "Reserves
and other internal accounts".
For income and expenditure - Form PL reporting - the accrued
pension payments recognised under IFRS for the quarter/year
as Current service cost, Past service cost, Losses on curtailment
and Net actuarial losses recognised during the year should be
included in item PL12AB, "operating expenses - pension
contributions". The other aspects of the P&L charge,
i.e. Interest cost and Expected return on plan assets should
be reported in item PL14, "other items". (Please also
see Statistical Notice 2005/02).
Q Statistical Notice 2004/06 provided guidance on the
statistical treatment of the effective yield concept as set
out in IFRS 18 and IFRS 39. There is a similar concept within
IFRS17 (Leases) not covered in Statistical Notice 2004/06, which
requires initial direct costs charged by the lessor are capitalised
and thereafter amortised over the life of the lease. This is
a change on pre-IFRS practice, how should interest on leases
be reported?
A Most banks expect to adopt the IFRS effective yield interest
measure for financial reporting through macro adjustments at
the portfolio level and, as a consequence, would be unable to
provide required sectoral/geographical detail for statistical
reporting of interest on the IFRS measurement basis. Statistical
reporting of interest on leases can therefore continue to be
provided on the current contractual basis - in line with interest
more generally - with any associated fees reported as such within
items 5 and 6 of form PL - as per existing guidance. If any
banks wish to provide the interest data on an effective yield
basis please discuss with your usual form PL contact, or email
us.
Q Where derivatives are designated as mortgage hedges
under IFRS, in the statutory Balance Sheet both the derivatives
and mortgages will be held at fair value with the impact on
the Profit and Loss dependent on the extent of hedge ineffectiveness.
How should these be reported on forms BT and PL?
A On form BT the change in the value of the underlying mortgage
portfolio should be reported in box 19cb (All other revaluations)
with the fair value of the hedging derivative reported in box
19b (Net liabilities under financial derivatives). Because these
revaluations are also taken straight through to P&L, they
should also both be reported in 19cd (Capital and other internal
accounts).
On form PL both the change in fair value of the underlying mortgage portfolio and the hedging derivative should be reported in box 8C (Dealing profits, of which: derivatives).
