A reallocation of external positions in the BIS locational banking statistics

10 December 2012

(Extract from page 19 of BIS Quarterly Review, December 2012)

A change in the treatment of external positions has been implemented in the BIS locational banking statistics by residence. It takes effect with the publication of this issue of the BIS Quarterly Review, and has been appliedretroactively; it therefore affects the historical time series for some aggregate figures.

This change was introduced in preparation for the Stage 1 and Stage 2 statistical enhancements that were approved by the Committee on the Global Financial System (CGFS) in January 2012.1 As part of these enhancements, banks will begin reporting in the locational banking statistics all financial claims and liabilities, including local currency positions vis-à-vis residents of the reporting country. Thus positions that banks could previously not allocate, especially own issues of debt securities, will be reported more comprehensively.

The change involves a reallocation of BIS reporting banks' positions (assets and liabilities) that had previously been treated as "external" (ie cross-border) to a new category called "unallocated by counterparty country". This category captures positions for which the reporting bank does not know the residence of the counterparty. In the past, these unallocated positions had been treated as external positions (that is, it was assumed that the counterparty was not in the same country as the reporting bank), and thus were included in aggregates of total external claims and liabilities. The change thus affects figures for reporting banks' total external positions vis-à-vis all countries.2 However, the change does not affect the data for reporting banks' external positions vis-à-vis individual countries.

The effect of the change can be understood more clearly with reference to Table 6A in the Statistical Annex, which contains BIS reporting banks' external claims on individual counterparty countries. The change enters in two ways. First, positions unallocated by counterparty country have been singled out in a separate memo item for both total assets and liabilities (last line in Table 6A). Second, since these unallocated positions are no longer treated as external positions, they are excluded from total external positions (first line in Table 6A). On the assets side,reporting banks' unallocated positions amounted to $488 billion (1.5% of total assets) at end-Q2 2012.3 On the liabilities side, these positions were a much larger $3 trillion (9.3% of total liabilities), reflecting the fact that banks generally cannot identify the holders of their debt securities liabilities, which trade on secondary markets, and thus cannot allocate these positions to a particular counterparty country or sector.

 

1 See "Improving the BIS international banking statistics", CGFS Papers, no 47, November 2012.
2 Such aggregates appear in one form or another in Tables 1, 2A-D, 3A-B, 5A-B, 6A-B and 7A-B, available at www.bis.org/statistics/bankstats.htm.   
3 In calculating these shares, total assets (liabilities) are taken to be the sum of external (crossborder) claims (liabilities) in all currencies, claims (liabilities) on residents in foreign currencies (Table 4) and claims (liabilities) unallocated by counterparty country.