Balances with the Bank of England/UK Central Bank
Cash ratio deposits: On 1 June 1998 a statutory scheme came into effect whereby both banks and building societies with average eligible liabilities of £400mn or more were required to hold non-interest-bearing deposits with the Bank of 0.15% of their eligible liabilities in excess of £400mn. With effect from 1 June 2004 the threshold for average eligible liabilities was changed to £500mn and the percentage was reduced to 0.11% on 2 June 2008. Adjustments to the amount of cash ratio deposits take place in June and December each year based on average eligible liabilities in the six months to April and October respectively. Arrangements prior to 1 June 1998 are detailed in the valuations and breaks section of these Explanatory notes.
Other: These comprise balances with the Bank of England other than cash ratio deposits.
Claims under sale and repurchase agreements are included until end-1995, after which time they are shown separately.
UK banks includes all money (including correspondent balances, finance leasing and initial margin payments relating to futures and options contracts) lent to, or placed with, other UK banks (excluding the Bank of England); and bills drawn by other UK banks under acceptance credit facilities which the reporting institution has itself discounted. Overdrawn accounts are included under deposits.
UK banks’ CDs include holdings of promissory notes and other short-term paper issued by other UK banks, and holdings of stocks and bonds having an original maturity of less than one year (up to and including one year’s original maturity with effect from 1992) which have been issued by other UK banks.
UK bank commercial paper includes banks’ holdings of commercial paper issued by UK resident banks.
UK building societies CDs etc. and deposits includes banks’ holdings of commercial paper issued by building societies and all deposits with building societies including finance leasing.
Non-residents includes all balances (including correspondent balances) with, and funds lent to, non-resident banks (except trade and portfolio investments); bills drawn by non-resident banks under acceptance credit facilities opened by the reporting institution which the reporting institution has itself discounted; and certificates of deposit, promissory notes, commercial paper and other short-term paper issued by non-resident banks and owned by the reporting institution.
Acceptances granted comprise a claim on the counterparty whose bill the banks have accepted except for bills both accepted and discounted by the same bank which are included as lending (unless subsequently rediscounted). Acceptances are classified according to the customer who has asked for the acceptance facility to be opened.
Eligible local government bills comprise UK local government bills which are eligible for rediscount at the Bank of England.
Eligible bank bills comprise all sterling bills which are payable in the United Kingdom and have been accepted by a reporting institution whose bills are eligible for rediscount at the Bank of England until 14 March 2005. (This is detailed in the September 1981 Quarterly Bulletin, page 348).
UK bank bills comprise all sterling bills which have been accepted by another UK bank, including sterling bills issued by the Bank of England.
Other bills include local government and bank bills which were not eligible for rediscount at the Bank of England, together with holdings of non-resident bills, UK commercial bills, commercial paper except that issued by banks or building societies, and other UK paper not included elsewhere. They exclude bills connected with lending under the special schemes for exports and domestic shipbuilding, and bills that the reporting institution has disposed of by rediscounting. Bills and notes are classified according to the currency in which they are drawn.
Other UK includes local government bills, public corporation bills not accepted by UK banks, sterling commercial paper issued by other UK residents, and UK paper not included elsewhere. It excludes bills connected with lending under the special schemes for exports and domestic shipbuilding, and bills which the reporting institution has disposed of by rediscounting. Bills and notes are classified according to the currency in which they are drawn.
Bank of England euro bills are included from April 1999, when the Bank assumed HM Treasury’s responsibility for issuing these instruments, last issued in April 2006.
Claims under sale and repurchase agreements comprise cash claims arising from the purchase of securities for a finite period with a commitment to re-sell. Claims which arise when securities or other assets are purchased in exchange for other securities etc. are excluded. The amount of the claim (or its currency denomination) is determined by the cash consideration not the market value (or currency denomination) of the securities.
These include all balances with, and lending (whether against collateral or not) to, customers, not included elsewhere. They include amounts receivable under finance leases and the reporting institution’s own acceptances which it has also discounted (except those drawn by other UK and non-resident banks, which are included in market loans). Own acceptances discounted are shown as advances to the party who has asked for the acceptance credit to be opened. Claims under sale and repurchase agreements are included until end-1995, after which these are shown separately.
Advances purchased by or assigned to the reporting institution under a transferable loan facility or similar arrangement are included, but loans where the borrower is a UK bank, a UK building society, a non-resident office of the reporting institution or another non-resident bank are reported under market loans. Provisions for bad and doubtful debts are not deducted. Where the reporting institution participates in (or acts as manager or co-manager of) a loan financed by more than one institution, only the reporting institution's participation for its own account is included, the loan being classified according to the ultimate borrower. See the note below on residential status for the definition of UK and non-residents.
Advances to the UK private sector include all medium and long-term lending (i.e. with an original maturity of two years or over), at fixed rates under Department of Trade and Industry guarantee for shipbuilding in the United Kingdom for UK buyers, excluding any amounts refinanced. Also included is all money placed with Stock Exchange money brokers and gilt-edged market makers.
Advances to other UK residents includes all medium and long-term lending (i.e. with an original maturity of two years or over), at fixed rates under Department of Trade and Industry guarantee for shipbuilding in the United Kingdom for UK buyers, excluding any amounts refinanced.
Advances to non-residents include all lending for exports under ECGD bank guarantee (excluding any amounts refinanced).
Banking Department lending to central government (net) comprises (from 1983) holdings by the Banking Department of the Bank of England of all forms of central government debt (including bank notes) less its deposit liabilities to the National Loans Fund and the Paymaster General. This item was discontinued from 1998 as a result of the removal of the Banking Department’s balance sheet from this table.
These include all securities beneficially owned by the reporting institution. They include securities which the reporting institution has sold for a finite period, but with a commitment to repurchase (i.e. repos), but exclude securities which have been bought for a finite period, but with a commitment to resell (i.e. reverse repos). Securities are defined as marketable or potentially marketable income-yielding instruments including bonds, FRNs, preference shares and other debt instruments but excluding certificates of deposit and commercial paper issued by banks and building societies, which are shown under market loans.
All investments are reported on a net basis, so that a negative position represents a short position in that particular type of security, for example as a result of borrowing that security.
UK government bonds include all bonds issued by the central government.
Other public sector investments include certificates of tax deposit, local government stocks and bonds which are listed on The London Stock Exchange and UK public corporation stocks and bonds.
Investments in UK banks include Bank of England Euro Notes from January 2001.
Investments in non-residents include deposits (including retained profits) with non-resident offices which have been invested in fixed assets such as premises and equipment.
Other investments include all investments in other UK banks, and deposits (including retained profits) with non-resident offices which have been invested in fixed assets such as premises and equipment.
Items in suspense and collection include all debit balances not in customers' names but relating to customers' funds rather than to the reporting institution's own internal funds (e.g. debit balances awaiting transfer to customers' accounts) and balances awaiting settlement of securities transactions. Collections comprise cheques etc. drawn, and in course of collection, on other UK banks and building societies. They include cheques that have been credited to customers’ accounts but are held overnight before being presented or paid into the reporting institution’s account with another UK bank or non-resident bank; they exclude cheques already passed to other UK banks for collection (these are included under ‘Market loans’ to UK banks). They include all collections on non-resident banks and items in transit to non-resident offices of the reporting institution, where the reporting institution is acting as principal and not as an agent for collection and where it has already given credit or value for the items.
Assets leased comprise all plant and equipment beneficially owned by the reporting institution which has been leased under finance lease agreements.
Accrued amounts receivable are gross amounts receivable but which have not yet been received and include interest and other revenues.
Other includes holdings of gold bullion and gold coin (in ‘Other currency assets’), other commodities (e.g. silver), together with land, premises, plant and equipment and other physical assets owned, or recorded as such, including assets leased under operating leases.
Other assets include holdings of gold bullion and gold coin (in ‘Other foreign currency assets'), other commodities, together with land, premises, plant and equipment and other physical assets owned, or recorded as such, including assets leased out under operating leases and leased in under finance leases. Assets leased out under finance leases are included as loans.
Acceptances comprise all bills accepted by the reporting institution which are still outstanding, excluding those which the reporting institution has itself discounted, but including any such discounts which have subsequently been rediscounted. Acceptances are classified according to the customer who has asked for the acceptance facility to be opened.
Holdings of own acceptances comprise all bills accepted by the reporting institution which the reporting institution has itself discounted, but excluding any such discounts which have subsequently been rediscounted.
Eligible banks’ total sterling acceptances comprises all bills accepted by a reporting institution whose bills are eligible for rediscount at the Bank of England including those which the reporting institution has itself discounted.
Eligible liabilities comprise, in broad terms, 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.
For statistical purposes, the United Kingdom comprises Great Britain and Northern Ireland, but from end-September 1997, excludes the Channel Islands and the Isle of Man. UK residents include: HM Government and other UK public authorities; enterprises which produce goods and services in the United Kingdom, including non-resident enterprises' branches and subsidiaries located and operating in the United Kingdom; individuals permanently resident in the United Kingdom (including temporary residents who have stayed, or who intend to stay, for a year or more) together with individuals normally resident in the United Kingdom who are overseas for less than a year; and members of UK armed forces and officials of HM Government serving overseas, as well as their dependants.
Non-residents include: non-resident governments, together with their diplomatic and military offices and representatives in the United Kingdom; international organisations, including their branches or representatives in the United Kingdom; UK representative offices of non-resident banks; non-resident offices of the reporting institution; enterprises located and operating overseas, including branches and subsidiaries of businesses which are themselves UK residents; and persons (including those of UK origin) who are residing outside the United Kingdom for a year or more.