Bank Reporting Forms, Definitions and Validations
Form PL - Frequently Asked Questions
Reporting frequency
| Q. | How does the Bank of England decide which banks report the PL form on a quarterly and which on an annual basis? | |
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| Q. | What are the quarterly reporting requirements? | |
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| Q. | What are the annual reporting requirements? | |
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Revisions and back-adjustments
| Q. | How should we treat revisions and back adjustments? |
| A. | The PL data is used for GDP and Balance of Payments purposes,
and therefore measures the economic activity relating to
a particular period, so it is important that there is a
clear distinction between activity undertaken in different
quarters. Examples: 1. Revisions. Assume that at the end of a half-year you realise that Q1's figures were overstated by an amount that you can identify directly. You should resubmit Q1's figures and report Q2 normally. 2. Back adjustments. You may find that because of an error in your method of calculating a certain line, there are several previous quarters that need adjusting. Also, you may not be sure how these adjustments split over several different quarters. In this scenario we encourage you to contact us to agree on a method of calculating the most accurate back-data. You should not show adjustments to previous quarters in the current quarter. 3. Small adjustments. If any adjustments total less than £1 million and as such they are not seen as material within the overall context of your figures, they need not be included. |
| Q. | Can the bank advise us on the level of 'acceptable tolerances' regarding the differences between the ER and PL forms? |
| A. | Tolerances of up to 5% either way will generally be allowed, but we may require explanation for any significant differences. A list of cross-form checks was attached to the Statistical Notice 2002/09 of the 17th December 2002 detailing how the two forms should reconcile. |
| Q. | We have a subsidiary that is incorporated in the Channel Islands but whose income is primarily generated in the UK. Would this subsidiary qualify as being "overseas"? |
| A. | The criterion on which it should be decided whether a subsidiary or branch is non-resident is its place of residency. Therefore, in this case, the subsidiary would count as overseas. |
| Q. | Are the Channel Islands part of the EU? |
| A. | No. |
Inter-desk deals
| Q. | How should we treat deals undertaken between different desks of our UK branch? |
| A. | Income relating to internal deals should be netted - i.e. the sum will be zero and there will be no resulting effect on the PL figures. |
Subsidiary and associate definition
| Q. | Can you provide us with a simpler definition of what constitutes a subsidiary and an associate? |
| A. | A company is defined as an "associate undertaking" of
another company if this other company meets two conditions.
Firstly, if it has between 10% and 50% of the voting shares
and, secondly if it exercises influence over its operating
and financial policy without it being a direct subsidiary. A company is defined as a "subsidiary undertaking" of another company if either of the following two conditions are met. Firstly, if this other company has over 50% of the voting shares or secondly, if it controls the composition of its board of directors, including the right to appoint or remove a majority of this board. |
Implications of changes to International Financial Reporting Standards
| Q. | What are the implications of IFRS changes to the new PL form? |
| A. | Statistical
Notice 2004/06 details the principal conclusions of
the Bank of England project examining the implications for
statistical reporting following the adoption of IAS from
2005, the notice also provides guidance to reporters on
the approach to be followed on statistical returns. For any other IFRS queries specific to Form PL, please email us or contact Abigail Hughes (Tel.020 7601 4174) or Martin Udy (Tel. 020 7601 4731). |
Q.
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We understand that you analyse banks' data for movements each quarter. Are there any other checks which you complete? |
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Yes. We also have a number of "equation" queries which we run against banks' data. These tend to check whether data is broadly plausible against other parts of the form or other forms and also checks that items are not negative when we expect them to be positive. These checks differ from validations since we do not necessarily expect the items to reconcile entirely. |
| Click here for a full list of rules |
Netted accounts
| Q. | How should netted accounts be treated? |
| A. | The treatment of netted accounts is that if gross flows are available then please report these. However, in the case of gross flows not being available, we have supplied some additional guidance on how to report including some change to reporting requirements. a) Assume there is a loan and a deposit for one customer, and the interest is calculated gross, but charged net. In this case, interest should be reported on a gross basis. If you have the gross flows, then this is our preferred treatment. b) Assume credit and debit balances exist for the same customer; interest is calculated net, and therefore charged/paid net. In this case, interest can be reported on a net basis. c) Assume there are credit and debit balances which either apply to customers in different economic sectors or are held in different countries, but which are pooled (either physically or notionally) for the calculation and posting of interest. In this case, we do not want to see the net flows. Therefore, if the gross flows are not available, you should exclude the interest from the figures. |
Direct investment interest
| Q. | Can you clarify what should be reported under items 24A and 25A (interest receivable/payable from/to non-resident group companies, subsidiaries and associates)? |
| A. | Entered in 24A should be ALL interest receivable from non-resident group companies on loans that are for the sole benefit of that group company rather than being treated as clients' funds. Entered in 25A should be ALL interest payable to non-resident group companies on deposits that are for the sole benefit of the reporter rather than being treated as clients' funds. |
Funding from/to overseas branch
| Q. | Could you clarify where you would expect to see the funding provided by an overseas branch? For example, the overseas branch receives customer deposits that are utilised centrally by the rest of the organisation. Where should we place the interest that is paid to the overseas branch for the provision of these funds? Should it be treated as interest payable to non-residents (item 2BM and 2BMA)? |
| A. | Yes. In Part 1 of the PL, this should be treated just like any other deposit, and be placed in 2BM and 2BMA. On Part 2 of the PL, this would be entered under 25B - interest payable on deposits to non-residents. |
Interest on trading instruments
| Q. | Where do we disclose interest receivable/payable on instruments held in our trading book - interest or dealing profits? |
| A. | Interest on instruments such as bonds and money market
instruments should be disclosed under the interest lines
whether they are held in your trading book or your banking
book. However, all payments relating to interest rate swaps should feed into dealing profits. This stands even if the interest rate swaps are solely used for hedging purposes. |
Part 1 breakdown
| Q. | Should the product breakdown of fees receivable include non-resident transactions? |
| A. | It is intended that this product split should be a breakdown of the total fees receivable figure (box 5). Therefore, it will include non-resident transactions. |
| Q. | We would like you to clarify our treatment of fees earned on lending facilities. A customer may pay us a front-end fee for a loan that runs for 2 years. Our treatment would be to take part of the fee into P/L immediately and then accrue the remaining amount into P/L over the life of the loan. Is this how you would like us to report on the PL form, or would you like us to report the full amount immediately? |
| A. | We are happy for you to report in line with your usual treatment. |
| Q. | Could you clarify whether you would expect the following types of fees to be placed under 5F (Loans and Advances) or 5H (other); guarantees, letters of credit, import and export bills, letters of credit commitments? |
| A. | The intention in 5F is to capture fees that directly relate to operating lending facilities. Therefore, the particular examples you have raised should all be placed in 5H (other). |
| Q. | There are parts of our banking group who partake in securitisations, and we provide liquidity lines for them as part of their operations. Would the fees that we receive for providing these facilities go in 5E (fees related to securitisations), or would 5F (loans and advances) be more suitable? |
| A. | As the fee is for providing liquidity lines, rather than directly for a securitisation, you should report this in 5F. |
| Q. | Where the individual product lines are further analysed by sector, should this include non-resident transactions? |
| A. | This question refers to items such as the breakdown of fees relating to loans and advances (box 5F) into private non-financial corporations and households. As 'non-resident' is a sector in itself (for example box 1BM), non-resident transactions should NOT be included in this sectoral breakdown. |
Part 2 breakdown
| Q. | On fees, how do the categories in section 27 (Part 2) map to those in section 5 (Part 1), as fees receivable from non-residents are analysed in both sections of the return? |
| A. | There is not intended to be any direct correlation between the two breakdowns. The only reconciliation will be between box 5A and box 27 - these two figures should be identical. This is included in the internal validations, i.e. if they are not equal, the form will automatically be rejected. |
Credit Card fees
| Q. | Where do we place fees relating to credit cards under item 5? |
| A. | Given there is no direct link between lending and fees on credit cards, these should be placed under 5H - Other. |
Current Account fees
| Q. | Can you clarify what sort of accounts should be included in item 5G - Bank charges for current account facilities? For example, we have several accounts that are not specifically current accounts but display similar characteristics. |
| A. | This item should, in principle, include all fees charged on current accounts and accounts of a similar nature, even if the account is not specifically called by that name. If you require guidance on any particular accounts please contact us. |
Fees incurred on behalf of a client
| Q. | When we undertake transactions on behalf of a client and therefore incur fees, on what basis should the sectoral breakdown be completed? |
| A. | The sectoral breakdown should be completed based on the provider of the service (i.e. the company which receives the fee). |
Holding gains and losses from debt securities
| Q. | We are not authorised to 'trade' instruments such as foreign exchange, securities and derivatives, the dealing profits of which are to be reported in section 8. However, occasionally, debt securities contained in the Banking Book are disposed of, and the resulting gains or losses are taken to the P&L account. In our statutory accounts these items are reported under interest receivable/payable. Can you clarify where you would expect to see these reported on the PL form? |
| A. | It is important for National Accounts purposes that holding gains and losses are not reported within the interest lines and therefore, contrary to your statutory accounts treatment; these should be reported within Dealing Profits (item 8). |
Classification of Dealing Profits on Commodities
| Q | Can you clarify where dealing profits resulting from commodities trading should be reported on the PL form? |
| A | The PL form splits dealing profits into three products – foreign exchange, securities and derivatives. Any dealing profits that do not fall into these categories (e.g. commodities) should be placed into the total lines PL8 in the appropriate currency. |
Transfer pricing
| Q. | Can you provide us with more details on your treatment of transfer pricing? |
| A. | The principle of transfer pricing is that the costs that are booked for a certain office should relate to the activity that took place at that office. Also, the income or expenditure relating to that activity should be booked on the same basis as if the payment were with an external entity. However, we appreciate that Head Offices often set the transfer pricing figure, and therefore that you do not necessarily know to what it relates. We are also aware that often, the transfer-pricing payment is passed through in the fourth quarter, when it relates to the whole year. In this case, we would like you to revise the previous quarters in the year to reflect their proportion of the payment. If you do not know how the payment is allocated through the year, simply spread the payment evenly over each quarter. |
Cashback amortisation
| Q. | Can you clarify the treatment of cashback amortisation? |
| A. | This should be placed in item 12C. We realise that in
statutory accounts, many banks will treat this as a reduction
in customer interest payments, and therefore we understand
that by placing this item in the breakdown of expenditure
there will be discrepancies in the reconciliation matrix
(for those of you who report it). However, by placing these types of items in box 12C, the PL will be in line with interest flows on the ER. |
Treatment of rental payments
| Q. | We have incidents of the rent for housing for ex?pats being paid to the employee and also being paid direct to the landlord/letting agent. Are they treated the same, and where should they be classified in the breakdown of 12? |
| A. | Where the rent is paid to the employee, this should be within 12AA but where it is paid directly to the landlord/agent this should be within 12AF, benefits in kind. |
Occupancy costs
| Q. | We do not own the buildings that we occupy, but pay rent for them. We also pay rent for the fixtures in these buildings e.g. air-conditioning and electronic entry systems. Please could you confirm how these items should be treated within 12BA, (occupancy costs)? |
| A. | As you suggest, all the items you mention here should be within occupancy costs, item 12BA, but only the rental on land and buildings should be included within item 12BAA. |
Specific placement of expenses
| Q. | Where should the following Operating expenses be shown? | |||||||||||||||||||||||||||
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Full-time equivalent employees
| Q. | What should we include in calculating the number of full-time equivalent employees (item 22)? Do we include agreed establishment numbers or the actual number of employees? Do we include contract staff? What about employees working for non-resident branches? |
| A. | - Please send us the actual number of employees as opposed
to the agreed establishment numbers. - If you have a number of employees who work for you, but whose contracts are not with you (i.e. the contracts lie with a third party), these should not be included. - If you have employees who work for non-resident branches, these should also be excluded. |
Sale of a loan book
| Q. | Where would we place a profit/loss that we make on the sale of a loan book? We placed this in 10C on the A3. |
| A. | We would expect to see items of this kind in box 14 - "Other items, including those which are exceptional and extraordinary". |
Releases of Provisions
| Q. | We are unsure of the distinction between releases of provisions (20AB) and a credit in the provision charge line 20AA, could you please clarify? |
| A. | You are correct to say that reporting a credit in 20AA instead of a release in 20AB would total to the same. However, 20AA is intended to capture new specific provisions made during the period. 20AB is intended to capture all releases of provisions (whether specific or general). |
Provisions
| Q. | Can you clarify the reporting of provisions? |
| A. | 20A should be the P&L charge for bad debt provisions. 20AA (specific) and 20AD (general) contribute positively to 20A, and 20AB (releases) and 20AC (recoveries) contribute negatively to 20A. The equation PL20A = PL20AA + PL20AD – PL20AB – PL20AC should hold. All figures should be entered as positive. 20B is the final balance sheet level of provisions at the end of the quarter and should be broadly consistent with the flow of provisions and write offs over the quarter. This is detailed in the Statistical Notice 2006/03.
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Reporting of profits for subsidiaries abroad and non-resident owned banks in the UK
| Q. | On what basis should profits of subsidiaries abroad and non-resident owned banks should be reported on the Form PL? |
| A. | Banks should report these figures on the basis of post-tax profit before dividend payments (including dealing profits); as detailed in the Statistical Notice 2005/01. |
Last updated: 27 November 2006
