Consolidated Exposures – Immediate and Ultimate Risk Basis

In March 2003, banks and selected Registered Financial Corporations (RFCs) began reporting their international assets, liabilities and country exposures to APRA in ARF/RRF 231 International Exposures. This return is the basis of the data provided by Australia to the Bank for International Settlements (BIS) for its International Banking Statistics (IBS) data collection. APRA ceased the RFC data collection after September 2010.

The IBS data are based on the methodology described in the BIS Guide on International Financial Statistics (see http://www.bis.org/statistics/intfinstatsguide.pdf; Part II International banking statistics). Data reported for Australia, and other countries, on the BIS website are expressed in United States dollars (USD).

Data are recorded on an end-quarter basis.

This statistical table contains two data worksheets - one presenting data expressed in Australian dollar (AUD) terms and the other in USD terms.

There are two sets of IBS data: locational data, which are used to gauge the role of banks and financial centres in the intermediation of international capital flows; and consolidated data, which can be used to monitor the country risk exposure of national banking systems. Only consolidated data are reported in this statistical table.

‘Total banks and RFCs’ is also reported in USD equivalent amounts, using the end-quarter AUD/USD exchange rate from statistical table F11. 

The consolidated data reported in this statistical table are on the international exposures of banks (and RFCs between March 2003 and September 2010) operating in Australia. The types of assets included here are consistent with the locational data in statistical table B12.1. However, the consolidated data differ from the locational data in three key ways: foreign currency positions with Australian residents are excluded (whereas they are included in the locational data); claims between different offices of the same institution (e.g. between the head office and its subsidiary) are netted (whereas positions, including intra-group positions, are reported on a gross basis in the locational data); and on-balance sheet derivatives are not included in international claims or foreign claims, but are included separately under ‘Derivatives’ in statistical table B13.2. Foreign-owned reporting entities report on an unconsolidated basis.

The consolidated data are split by type of exposure. ‘International claims’ refers to all cross-border claims plus foreign offices’ local claims on residents in foreign currencies; foreign claims refers to all cross-border claims plus foreign offices’ local claims on residents in both local and foreign currencies; immediate risk claims (expressed by the BIS as claims on an immediate borrower basis) cover claims based on the country where the immediate counterparty resides; and ultimate risk claims cover immediate exposures adjusted (via guarantees and other risk transfers) to reflect the location of the ultimate counterparty/risk.

Foreign offices include the overseas branches, subsidiaries and joint ventures of a bank (or RFC between March 2003 and September 2010).

Risk transfers are those transfers of risk from the country of the immediate borrower to the country of ultimate risk as a result of guarantees, collateral, and where the counterparty is a legally dependent branch of a bank headquartered in another country. The risk reallocation includes loans to Australian borrowers that are guaranteed by foreign entities and therefore represent outward risk transfers from Australia, which increase the ultimate exposure to the country of the guarantor. Similarly, foreign lending that is guaranteed by Australian entities is reported as an inward risk transfer to Australia, which reduces the ultimate exposure to the country of the foreign borrower. The risk reallocation also includes transfers between different economic sectors (banks, public sector and non-bank private sector) in the same country. 

Foreign claims on an ultimate risk basis are shown for the following types of reporting entity: Australian-owned banks (i.e. those with their parent entity legally incorporated in Australia); foreign subsidiary banks; branches of foreign banks; RFCs; and Australian-owned entities (i.e. Australian-owned banks and RFCs). The RFC data are only available between March 2003 and September 2010.

‘Foreign claims (ultimate risk basis) – Aust-owned entities’ is also reported in USD equivalent amounts, using the end-quarter AUD/USD exchange rate from statistical table F11.


Tags: banks, finance, rba, rfcs, statistics
Organization: Reserve Bank of Australia