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

March 2019
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 Locational Banking Statistics in Japan"

A.Definition

The BIS international locational banking statistics (LBS) are quarterly statistics that the Bank for International Settlements (BIS) compiles and publishes on a global basis to capture claims and liabilities of the international division held by banks located in 47 major reporting countries/economies1 (see below for the list of reporting countries). The Bank of Japan (the Bank) compiles the figures of reporting banks located in Japan and publishes them as "Results of BIS International Locational Banking Statistics in Japan (Results of LBS in Japan)."

(Note 1)

list of reporting countries
[Developed Countries] [Offshore Centers] [Developing Countries]
Australia
Austria
Belgium
Canada
Cyprus
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Japan
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
United Kingdom
United States
Bahamas
Bahrain
Bermuda
Cayman Islands
Curacao2
Guernsey
Hong Kong SAR
Isle of Man
Jersey
Macao SAR
Panama
Singapore
Brazil
Chile
China
Chinese Taipei
India
Indonesia
Malaysia
Mexico
Philippines
Russia
South Africa
South Korea
Turkey

(Note 2) Reporting by "Netherlands Antilles" prior to the data for end-Sept. 2010

B.Purpose of Statistics

From the perspective of capturing capital flows through the banking sector in international financial markets, the LBS aim to reveal: (a) to which countries/economies (including non-reporting countries/economies) banks located in each reporting country provide funding, and (b) from which countries/economies they acquire funding. With the use of "Results of LBS in Japan," it is also possible to capture international capital flows through the banking sector in Japan.

C.Background of Statistics

With the expansion of international financial trades in offshore markets in Europe since the early 1970s, central banks in major developed countries including the Bank came to better appreciate the necessity to more precisely capture the trends of international capital flows. This led to the commencement of compilation of "The BIS International Locational Banking Statistics," initiated mainly by the BIS.

II.Compilation Methods

A.Reporting Banks

Reporting banks are those located in Japan and in principle authorized to conduct business in Japan Offshore Market.

"Banks located in Japan" include: (a) Japanese banks' domestic bases (headquarters, branches, and subsidiaries), and (b) foreign-owned banks' affiliates (branches and subsidiaries) located in Japan (foreign banks), while they exclude overseas affiliates of Japanese banks. For instance, branches of a U.S. bank in Tokyo are classified as banks located in Japan and, thus, are included in "Results of LBS in Japan," whereas branches of a Japanese bank in London are classified as banks located in the United Kingdom and, thus, are included in the U.K. figures.

B.Coverage

All balance-sheet external positions that represent financial claims and liabilities of the international division held by reporting banks (including trustee positions) are reported (see the table below for details). Specifically, on-balance claims and liabilities arising from (a) cross-border transactions and (b) non-cross-border transactions denominated in foreign currencies are reported, whereas those from (c) non-cross-border transactions denominated in yen are not. Claims and liabilities held by each bank on inter-office accounts arising from transactions with its own overseas affiliates are also reported.

Coverage of claims and liabilities of the international division in the LBS
Foreign currencies Yen
Cross-border (a)* (a)*
Non-cross-border (b)* (c)

The coverage of the LBS is indicated by asterisks (*).

For instance, loans denominated in U.S. dollar or loans denominated in yen to overseas borrowers extended by domestic bases of Japanese banks are reported; loans vis-à-vis Japan denominated in yen are not reported.

C.Reference Reporting Period

The figures reported are as of the end of each quarter (March, June, September, and December).

D.Reported Currency

All items are reported in million U.S. dollar. Transactions denominated in yen, pound sterling, Swiss franc, and euro are converted into U.S. dollar at the end-of-month exchange rates prevailing on the reference reporting period. Those denominated in other foreign currencies are converted into U.S. dollar by the exchange rates designated by ministerial ordinance as of the reference reporting period.

E.Survey Methods

The Bank publishes "Results of LBS in Japan" by aggregating the figures in the report submitted in accordance with Foreign Exchange and Trade Act ("Report regarding claims and liabilities by counterparty country on non-residents 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

Claims and liabilities resulting from all cross-border transactions by banks located in Japan are broken down (a) by counterparty country and region, (b) by sector, and (c) by currency. Claims and liabilities denominated in foreign currencies resulting from non-cross-border transactions by banks located in Japan are also broken down by currency and published as memorandum items. The figures are available in "Quarterly data" and "Long-Term Time-Series data."

As for the figures broken down (b) by sector and (c) by currency, among all reporting banks the data reported by Japanese banks are aggregated and released as the category "Domestic banks" in "claims and liabilities" in long-term time-series data.

B. Brief Explanation of Each Breakdown

1. By counterparty country and region

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

The positions in which their counterparty regions or countries/economies are unidentifiable are assigned to the category "unallocated;" "liabilities" in the "unallocated" category includes debt securities issued by banks.

2. By sector

Counterparty sectors are allocated by (a) "bank sector," which includes deposit-taking institutions, foreign central banks, and other official monetary authorities; and (b) "non-bank sector," which excludes those classified as "bank sector." From the data for end-Dec. 2014, the breakdowns of "bank sector - of which related offices" and "non-bank sector - of which non-bank financial institutions" are available as a subsector of each breakdown. "Non-bank sector - of which non-bank financial institutions" includes financial institutions that are not classified as "bank sector," such as securities investment trusts, pension funds, insurance companies, financial auxiliaries, and other financial intermediaries.

3. By currency

The data are allocated by yen (for cross-border transactions only), U.S. dollar, pound sterling, Swiss franc, euro, and "other currencies" according to the currency in which the transactions are denominated.

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.

"Estimated exchange rate adjusted changes"

These figures are memorandum data wherein the effects of exchange rate fluctuations of major currencies during a reference reporting period, i.e., yen, euro, pound sterling, and Swiss franc are adjusted by converting the difference in the outstanding amount from the previous quarter-end denominated in each of the major currencies into U.S. dollar using the corresponding average exchange rate within the reference reporting period. Specifically, (a) figures reported in U.S. dollar are converted into each major currency, using the corresponding exchange rates as of the end of the quarter, (b) the difference from the previous quarter is calculated, and (c) the difference from the previous quarter is then converted back into U.S. dollar, using the corresponding average exchange rate within the quarter. These figures are available from the data starting from end-March 2002.

C.Comparison with BIS International Consolidated Banking Statistics

Among statistics that focus on banks' international division compiled by the BIS, the BIS International Consolidated Banking Statistics (CBS) are available along with the LBS, which aim to capture banks' international credit exposures by counterparty countries/economies (see Explanation of "Results of BIS International Consolidated Banking Statistics in Japan" for more details). Compared with the CBS, the LBS have advantages in that they reveal: (a) banks' net positions of capital flows reflecting that both the claims and liabilities are reported in the LBS; and (b) information about transactions broken down by currency.