Balance sheet data cover both the liabilities and assets of all UK resident banks and building societies.
Transactions within the MFI sector are netted out. Because the contributions of the central bank, other banks and building societies are consolidated at the MFI level, they do not, for instance, show banks' positions with building societies. As a result, the contributions of the central bank, other banks and building societies are not balance sheets in their own right, but show the contributions to the wider MFI balance sheet.
With effect from April 1998, UK statistics were brought into line with the standards of the European System of Accounts ('ESA95'). A new monetary financial institutions (MFI) sector was introduced, comprising the central bank, other banks and building societies.
Further explanation of the link between the published monetary statistics and the MFIs' consolidated balance sheet is detailed in the Statistics article ‘Monetary statistics and the monetary financial institutions consolidated balance sheet’.
The instrument detail is consistent with that specified in ESA95. The full instrument breakdown is as follows:
- currency, deposits and money market instruments
- financial derivatives
- other securities issued
- other financial liabilities
- securities other than financial derivatives
- financial derivatives
- other financial assets
Adjustments on consolidation
As noted above, in producing the MFI consolidated balance sheet, transactions between MFIs are netted. Any difference between reported liabilities to, and claims on, other MFIs is handled as follows.
The inter-MFI difference is allocated to sectors according to the results of a detailed investigation of its causes. For further details see the article ‘Estimation and allocation methods within money and credit data’. In particular, the allocation of the sterling inter-MFI difference is as follows:
- 35% added to other financial corporation (OFC) deposits, within wholesale M4
- 15% added to non-resident deposits
- 35% deducted from OFC loans, within M4 lending
- 15% deducted from non-resident loans
The allocation of the foreign currency inter-MFI difference is as follows:
- 30% added to OFC foreign currency deposits
- 20% added to non-resident foreign currency deposits
- 30% deducted from OFC foreign currency loans
- 20% deducted from non-resident foreign currency loans
Before September 2011, 95% of the sterling inter-MFI difference was allocated to OFC deposits within wholesale M4, the remaining 5% being allocated to transits. In addition, 60% of the foreign currency inter-MFI difference was allocated to non-resident foreign currency deposits, and 40% to OFC foreign currency deposits. This was based on the results of an earlier investigation.
Currency, deposits and money market instruments
Currency includes notes issued by Scottish and Northern Irish banks (net of Bank of England notes held as backing) as well as notes issued by the Issue Department of the Bank of England. Holdings of currency by the private sector are the residual of the total issued less estimated holdings by all other sectors. (Coin is a liability of the Government and not included within currency in the MFIs' balance sheet.) Deposits and money market instruments include estimated holdings of MFIs’ certificates of deposit, commercial paper, bonds, floating-rate notes and other instruments of up to and including five years' original maturity, and, from December 1995, liabilities arising from repos.
With the addition of its holding of UK coin, the private sector's holding of sterling bank notes, deposits and money market instruments equals M4.
This is made up of:
- MFIs’ net liabilities under financial derivatives
- unsubordinated instruments of more than five years' original maturity
- other capital items, including retained profits
In the contributions tables, these instruments are shown as one category ('other liabilities'), while they are shown separately at the MFI balance sheet level.
This includes all forms of lending by MFIs, other than holdings of securities. It includes holdings of non-bank bills, amounts receivable under finance leases, and, from December 1995, lending under reverse repos. A revised treatment of acceptances was introduced in September 1997 and backdated. Although acceptances are still reported off balance sheet by individual reporters, in aggregate in the consolidated balance sheet, and in the monetary statistics, they now count as on the balance sheet of the accepting reporter i.e. a bank accepting a bill is regarded as having a claim on the party on whose behalf the acceptance credit facility was opened, and a liability to the holder of the bill. Almost all sterling bank bills are held by other MFIs, so the resulting liabilities and claims net out on consolidation. For further details see the Statistics articles ‘Outcome of the review of banking statistics, including effects on monetary and other banking statistics’ and ‘Impact of the review of banking statistics: changes and additions to published data’.
MFIs' sterling loans to, and investments in, the private sector are equal to the sterling lending counterpart to M4.
Other assets include fixed assets, gold bullion beneficially owned, and other commodities.