Document ID: chunk:federal_register_of_legislation:F2017L01022:body:0:p7
Version: federal_register_of_legislation:F2017L01022
Segment Type: other
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Character Range: 17511–20585

items and represents the natural accounting type of the item collected.

Valuation

Assets and liabilities should be measured in accordance with Australian accounting standards.

Note: International financial claims should be reported gross of specific provisions and General Reserve for Credit Losses as defined by Prudential Standard APS 220 Credit Quality. Provisions and reserves are not to be included in ARF 731.1, ARF 731.3A and ARF 731.3B.

When reporting the data, reporting entities should also ensure that all figures be prepared in accordance with applicable Australian accounting principles.

As a general rule, it is recommended that financial claims belonging to the banking book be valued at face values or cost prices and financial claims belonging to the trading book be valued at market or fair values which is largely consistent with AASB 139 Financial Instruments: Recognition and Measurement.

Background to the international exposures forms

There are two main sets of international banking data: the locational and consolidated banking statistics.

The locational statistics (collected on ARF 731.1) collect data on the domestic books international financial claims (assets) and liabilities of resident banks. The main purpose of the statistics is to provide information on the role of banks and financial centres in the intermediation of international capital flows. The key organisational criteria are:

     * the country of residence of the reporting entities and their counterparties; and

     * the recording of all positions on a gross basis, including those vis-à-vis own affiliates.

This methodology is consistent with the principles underlying the compilation of national accounts, balance of payments and external debt statistics.

The consolidated statistics (collected on ARF 731.3A, ARF 731.3B and ARF 731.4) collects data on international on-balance sheet (and selected off-balance sheet) financial claims (i.e. contractual lending) of banks vis-à-vis the rest of the world and provides a measure of the risk exposure of lenders' national banking systems.

The key difference between the two sets of BIS banking data is based upon the concept of residency. Locational statistics show the claims and liabilities of banks located in Australia vis-à-vis entities located in other countries, including inter-office positions, and domestic entities.

The consolidated statistics show the total claims of a reporting entity group's global offices, including the claims of their domestic and foreign affiliates. Claims between offices of the same entity group are netted out.

The differences between locational and consolidated statistics are highlighted in an example in Figure 1. ABC Bank (headquartered in Sydney) has lent $10 million to a non-financial corporation located in France routed via its branch office in London.

Figure 1: Flow of funds and BIS locational and consolidated statistics

 $10m $10m

The implications of this transaction for the BIS data are as follows:

Locational statistics:
Australian-resident bank (i.e.