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.