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Explanation of "Results of BIS International Consolidated Banking Statistics in Japan"

March 2020
Bank of Japan
Financial Markets Department

Basic information

Compilation section :
Financial Markets Statistics Group, Coordination and Market Analysis Division, Financial Markets Department, Bank of Japan

Frequency of compilation : Quarterly

Time of release : March, June, September, December

Method of release : Bank of Japan's website

I.Overview of "Results of BIS International Consolidated Banking Statistics in Japan"

A.Definition

The BIS international consolidated banking statistics (CBS) are quarterly statistics that the Bank for International Settlements (BIS) compiles and publishes on a global basis to capture international credit exposures of banks headquartered in 31 major reporting countries/economies1 (see below for the list of reporting countries). The Bank of Japan (the Bank) compiles the figures of reporting banks headquartered in Japan and publishes them as "Results of BIS International Consolidated Banking Statistics in Japan (Results of CBS in Japan)."

(Note 1)

list of reporting countries
[Developed Countries] [Offshore Centers] [Developing Countries]
Australia
Austria
Belgium
Canada
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Japan
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
Hong Kong SAR
Panama
Singapore
Brazil
Chile
Chinese Taipei
India
Mexico
South Korea
Turkey

B.Purpose of Statistics

The CBS aim to reveal to which countries/economies (including non-reporting countries/economies) banks headquartered in each reporting country have credit exposures. With the use of "Results of CBS in Japan," it is also possible to capture international credit exposures through the banking sector in Japan.

C.Background of Statistics

In the wake of the Latin American debt crisis in the early 1980s, central banks in developed countries came to better appreciate the necessity to more precisely capture banks' credit exposures with the breakdown of counterparty countries/economies. This led to the commencement of compilation of "The BIS International Consolidated Banking Statistics," initiated mainly by the BIS at the end of 1983. Developing countries participated in the CBS, and the counterparty-country breakdown was extended to include claims vis-à-vis developed countries. Furthermore, since attention to capturing country risk shifted from the residence of immediate counterparty to the residence of the obligor wherein the ultimate risk lies, the continuous discussions among central banks resulted in significant enhancements to the content of the statistics including the refinement of breakdowns of "an ultimate risk basis" from the data for end-Dec. 2004.

II.Compilation Methods

A.Reporting Banks

Reporting banks are those headquartered in Japan that are in principle authorized to conduct business in Japan Offshore Market. They include their domestic bases (headquarters, branches, and subsidiaries) as well as overseas affiliates (branches and subsidiaries). Therefore, "Results of CBS in Japan" reveals to which countries/economies Japanese banks have credit exposures as a whole, including credit activity by overseas affiliates of Japanese banks.

B.Coverage

Claims of the international division of reporting banks are reported (including trustee positions), and the CBS comprise "an immediate borrower basis" and "an ultimate risk basis." Their figures are consolidated-based aggregated figures on both "an immediate borrower basis" and "an ultimate risk basis." Thus, transactions with domestic bases and overseas affiliates that are part of the same banking group are excluded from the coverage of transactions.

1. Immediate borrower basis

Claims on "an immediate borrower basis" identify counterparties according to counterparty countries/economies in which the immediate counterparty is located. For example, claims on (a) a Japanese company located in the United States and (b) a U.S. company located in the United States are both classified as claims vis-à-vis the United States.

The coverage of transactions includes: (a) cross-border claims (i.e., cross-border transactions carried out by Japanese banks) and (b) local claims in non-local currencies abroad. In addition to these positions, (c) local claims in local currency abroad are also compiled (see a table below).

Coverage of claims on an immediate borrower basis
Claims denominated in non-local currencies Claims denominated in local currency
Cross-border claims (a)* (a)*
Local claims abroad (b)* (c)

The coverage of "Total (immediate borrower basis)" is indicated by asterisks (*). Item (c) is compiled distinctively.

2. Ultimate risk basis

Claims on "an ultimate risk basis" identify counterparties according to the countries/economies in which the ultimate risk lies, rather than the residence of immediate counterparty countries/economies. Specifically, claims on borrowers' overseas affiliates are classified as claims on the country/economy in which their head office is located. Credit risk mitigants that shift a bank's credit exposure, such as guarantees, credit derivatives, and collateral are also taken into account. For instance, claims on a New York branch of a U.K. bank are classified as claims vis-à-vis the United Kingdom rather than the United States. Similarly, claims on a U.S. company located in the United States which are guaranteed by a U.K. bank are classified as claims vis-à-vis the United Kingdom, rather than the United States. Classifying claims based on their ultimate risk can measure the amount of claims in a real sense on which counterparty countries/economies banks hold claims, regardless of the residency of their immediate counterparties.

The coverage of claims includes item (c) as well as items (a) and (b) that are mentioned in "an immediate borrower basis" above. In addition, "Derivatives contracts," "Guarantees extended," and "Credit commitments" are also compiled distinctively.

Coverage of claims on an ultimate risk basis
Claims denominated in non-local currencies Claims denominated in local currency
Cross-border claims (a)* (a)*
Local claims abroad (b)* (c)*

The coverage of "Total (ultimate risk basis)" is indicated by asterisks (*).

C.Reference Reporting Period

The figures are as of the end of every quarter (March, June, September, and December), reported in financial accounting by reporting banks. Prior to 1999, the figures were published semiannually (end-June and end-December).

D.Reported Currency

All items are reported in million U.S. dollar. All currencies other than U.S. dollar are converted into U.S. dollar at the end-of-month exchange rates prevailing on the reference reporting period.

E.Survey Methods

The Bank publishes "Results of CBS in Japan" by aggregating figures in the report submitted in accordance with Foreign Exchange and Trade Act ("Report regarding external claims by counterparty country held by banks"), as well as those in other related reports submitted to the Bank.

F.Notice on Usage

The figures are corrected immediately when reporting banks are found to have misreported past figures. In principle, the figures are corrected retroactively for no longer than the previous twelve quarters, and they are released on the following release date after corrected figures are reported to the Bank.

III.Contents

A.Breakdowns

1. Immediate borrower basis

Japanese banks' cross-border claims in all currencies and local claims in non-local currencies2 are classified (a) by counterparty country and region, (b) by sector, and (c) by maturity. Local claims in local currency held by Japanese banks are also classified by counterparty countries/economies and regions.

The figures on an immediate borrower basis are available from the data for end-June 1990.

(Note 2)

From the data for end-Dec. 2014, the breakdown of the total amounts outstanding of claims was expanded to include local claims in non-local currencies (they include, in part, estimates).

2. Ultimate risk basis

Japanese banks' cross-border claims and local claims are classified (a) by counterparty country and region and (b) by sector, and released in "Releases" along with "Derivatives contracts," "Guarantees extended," and "Credit commitments." Cross-border claims and local claims are each allocated according to counterparty country and region, and released in "Long-Term Time-Series data." For more details about these figures, please see "B. Brief Explanation of Each Breakdown" below.

The figures on an ultimate risk basis are available from the data for end-Dec. 2004.

B. Brief Explanation of Each Breakdown

1. Immediate borrower basis

a. By counterparty country and region

The data are allocated according to the residence of immediate counterparties, based on geographical breakdown (about 130 countries/economies) adopted in the CBS that the BIS compiles on a global basis.

b. By sector

Counterparty sectors are allocated by: (a) "official sector," which includes general governments, social security funds, central banks, international organizations, and government-owned financial institutions or companies that are not allowed to receive deposits; (b) "banks," which includes financial institutions that are allowed to receive deposits and grant credits or trade on their own accounts; and (c) "non-bank private sector," which is classified as neither (a) nor (b). From the data for end-Dec. 2014, "non-bank financial institutions" has been published as a subsector of "non-bank private sector." "Non-banks financial institutions" includes financial institutions that are classified as "non-bank private sector," such as securities investment trusts, pension funds, insurance companies, financial auxiliaries, and other financial intermediaries.

c. By maturity

Maturities are allocated by "up to and including one year," "over one year up to two years," and "over two years." The sum of each component of the maturity breakdown does not equal the total claims, since those claims that cannot be allocated by maturity, e.g., equities, are excluded from the maturity breakdown.

2. Ultimate risk basis

a. By counterparty country and region

The data are allocated according to the residence of obligors in which ultimate risk lies, based on the geographical breakdown (about 130 countries/economies) adopted in the CBS that the BIS compiles on a global basis.

b. By sector

See "b. By sector" under "1. Immediate borrower basis" above.

c. By cross-border and local

Local claims held by overseas affiliates on an ultimate risk basis are classified as "local claims," and the rest are classified as "cross-border claims."

d. Derivatives contracts

OTC derivative instruments with positive market values are considered claims and reported on an ultimate risk basis.

e. Guarantees extended

Amounts of guarantees extended by financial institutions to pay third-party beneficiaries to which their clients have liabilities are reported on an ultimate risk basis. They include guarantees extended to loans from other financial institutions, guarantees of bills, issuance of letters of credits related to foreign exchange transactions, and warranties of debt issuance.

f. Credit commitments

Undisbursed amounts of credit commitments3 are reported on an ultimate risk basis, which are calculated by subtracting the amounts of extended credit from the credit limit.

(Note 3)

Legally binding agreements that irrevocably obligate an institution, at a client's request, to extend credit in the form of loans up to a predetermined limit within a specified time frame. Borrowers are allowed to take out loans from financial institutions anytime during the term of the agreement subject to the contracts, so long as the amounts are within the limit of the credit commitment.

IV.Others

A.Release Date

The figures are published about three months after the reference reporting period.

B.Glossary

"Japan Offshore Market Account"

In general, an offshore market refers to an international financial market where cross-border transactions are conducted relatively free of financial and tax restrictions that would be imposed on domestic transactions. Financial institutions that wish to conduct offshore transactions are required to open a Japan Offshore Market Account after seeking and obtaining approval from the Ministry of Finance. In addition, in order to carry out corresponding transactions, they need to manage their capital separately from the capital pertaining to general domestic transactions.

C.Comparison with BIS International Locational Banking Statistics

Among statistics that focus on banks' international division compiled by the BIS, the BIS International Locational Banking Statistics (LBS) are available along with the CBS, which aim to determine capital flows through the banking sector in international financial markets (see Explanation of "Results of BIS International Locational Banking Statistics in Japan" for more details). Compared with the LBS, the CBS have advantages in that they reveal: (a) the amount of consolidated-based credit exposures that banks in each reporting country have to a particular country/economy and region; and (b) detailed information about transactions broken down by sector and maturity.