Circular BCL 2002/170 of 5 June 2002 — Modification of Statistical Tables S1.1 "Monthly Balance Sheet" and S2.5 "Quarterly Balance Sheet" and Abolition of Tables S1.2 "Simplified Monthly Balance Sheet" and S2.6 "Detail of Claims on Customers"

Luxembourg, 5 June 2002
To all credit institutions

CIRCULAR BCL 2002/170

Modification of Statistical Tables S1.1 "Monthly Balance Sheet" and S2.5 "Quarterly Balance Sheet" and Abolition of Statistical Tables S1.2 "Simplified Monthly Balance Sheet" and S2.6 "Detail of Claims on Customers"

Ladies and Gentlemen,

On 23 November 1998, the Council (EC) adopted Regulation No. 2533/98 concerning the collection of statistical information by the European Central Bank (ECB). This regulation complements the framework of the ECB's statistical activities necessary to enable the European System of Central Banks (ESCB) to perform its functions by defining the natural and legal persons subject to reporting obligations, the confidentiality regime, and adequate implementation and sanction provisions, in accordance with Article 5.4 of the Statutes of the European System of Central Banks and of the European Central Bank.

Following this Council Regulation, the Governing Council of the ECB adopted ECB Regulation 2001/13 on the consolidated balance sheet of the monetary financial institutions (MFI) sector.1

The ECB's statistical reporting requirements within the framework of the consolidated balance sheet of the monetary financial institutions (MFI) sector are governed by three essential rules. First, the ECB must receive comparable, reliable, and up-to-date statistical information, collected under similar conditions throughout the euro area.

Second, the reporting obligations established in the regulation must respect the principles of transparency and legal certainty. The regulation is therefore binding and applies directly throughout the euro area. It imposes obligations directly on natural or legal persons, subject to sanctions that may be imposed by the ECB if reporting requirements are not met.

Finally, the ECB has minimized the reporting burden as much as possible. Thus, the statistical data collected by the National Central Banks (NCBs) under the aforementioned regulation also serve to calculate the reserve base in accordance with the ECB's regulation on reserve requirements.

The statistical information subject to reporting in accordance with the ECB's statistical requirements and the minimum standards to be respected are detailed in the aforementioned ECB regulation.

1. Objectives

Based on these documents, the BCL modifies the existing collection system by this circular to achieve the following objectives:

1. Complete coverage of the European Central Bank's requirements for banking and monetary statistics and balance of payments.

The statistical tables S1.1 "Monthly Balance Sheet" and S2.5 "Quarterly Balance Sheet" have been modified to provide all information necessary for the preparation of statistics to be transmitted to the ECB and for the calculation of reserve requirements. Furthermore, the off-balance sheet section of table S2.5 "Quarterly Balance Sheet" has been modified to provide additional information required in the field of Luxembourg's balance of payments.

2. Consistency with data collected for prudential supervision purposes.

The objective is to base the preparation of tables on accounting concepts identical to those adopted by the Commission de Surveillance du Secteur Financier (CSSF) and which form the basis for prudential reporting.

3. Compatibility with the ESA95 standard (European Standards for National Accounts 1995).

The conformity of data collected according to the ESA95 standard will facilitate their use in the field of national accounting and balance of payments, thereby avoiding, as far as possible, additional surveys.

2. Abolition of Statistical Tables S1.2 "Simplified Monthly Balance Sheet" and S2.6 "Detail of Claims on Customers"

The ECB's new requests for information on credit granted to the non-financial sector and primarily to the household sector imply a considerable extension of table S1.1, as detailed information is required on a monthly basis. The integration of these requests into the monthly table S1.1 results in table S2.6 "Detail of Claims on Customers" becoming obsolete. This table is therefore abolished with effect from 1 January 2003.

The takeover of the activities of the Belgian-Luxembourg Exchange Institute by the BCL, as well as the BCL's contribution to the preparation of Luxembourg's financial accounts, starting from January 2004, imply a more detailed knowledge of the assets and liabilities of the Luxembourg banking sector, notably due to the importance of the latter in the Luxembourg economy, and even the euro area. Consequently, table S2.5 "Quarterly Balance Sheet" has been substantially modified, particularly at the off-balance sheet level, to provide the information required in the field of balance of payments preparation, particularly regarding the estimation of Luxembourg's investment income.

Since the importance of off-balance sheet activities is not necessarily linked to the size of a credit institution's balance sheet, and since statistical requirements in the field of balance of payments do not exempt small credit institutions from full reporting, the BCL has decided to reinstate a complete and identical reporting scheme for all credit institutions.

Thus, all credit institutions are invited to submit monthly the statistical table S1.1 "Monthly Balance Sheet" and quarterly the statistical table S2.5 "Quarterly Balance Sheet".

3. Main Modifications of Statistical Tables S1.1 and S2.5

The essential modification stems from a need for more detailed information regarding liability items necessary for the calculation of euro area monetary aggregates, as well as credits granted to euro area residents, which constitute the counterpart to monetary aggregates.

To integrate these modifications into tables S1.1 and S2.5, it was necessary to modify both the structure of the tables and the detail of the information to be reported.

3.1. Modifications of Statistical Table S1.1 "Monthly Balance Sheet"

3.1.1. Breakdowns by Initial Maturity and by Economic Sector

• at the asset level, the breakdown by initial maturity is reorganized and made more detailed for the items "Credits" and "Debt Securities Held"
• at the asset level, a more detailed sectoral breakdown is introduced for the item "Credits"
• at the liability level, a more detailed sectoral breakdown is introduced for the items "Demand Deposits", "Time Deposits", "Deposit with Agreed Maturity", and "Repurchase Agreements"
• at the liability level, a breakdown by initial maturity of "Repurchase Agreements" with counterparties located outside the euro area is introduced

3.1.2. Modifications of Asset and Liability Items

• the item "Money Market Securities" is removed due to the difficulty inherent in the correct identification of money market securities. Henceforth, money market securities are to be included under the item "Debt Securities Held" and/or "Debt Securities Issued" depending on whether they are asset and/or liability items of the balance sheet
• at the asset level, three new items titled respectively "Real Estate Loans", "Consumer Credit", and "Other Credits" have been added. Information on these three new instruments is to be provided only for counterparties belonging to the household sector and non-profit institutions serving households
• at the asset level of the balance sheet, a new item titled "Money Market Fund Shares" is introduced to record shares issued by money market funds appearing on the official list of monetary financial institutions and held in portfolio by credit institutions
• to better capture the netting of claims and obligations carried out in the context of the calculation of the reserve base and requirement, the column titled "Netted Amounts" has been modified to take into consideration only amounts that can actually be subject to netting

3.2. Modifications of Statistical Table S2.5 "Quarterly Balance Sheet"

The modifications to the table structure have a dual purpose: to record the information requested by the new ECB regulation and to create parallelism with table S1.1 "Monthly Balance Sheet". In addition, various modifications are introduced, primarily at the off-balance sheet level, to collect information necessary for estimating the flow of investment income in the context of preparing Luxembourg's balance of payments.

3.2.1. Breakdowns by Initial Maturity, by Country, and by Economic Sector

• report S2.5 is no longer to be prepared according to the residual maturity concept but according to the initial maturity concept of assets and liabilities
• the sectoral breakdown is maintained but simplified for Luxembourg resident counterparties, as the specific sectoral breakdown for the Luxembourg non-financial sector is abandoned. The sectoral breakdown of Luxembourg counterparties will therefore be identical to that required for other euro area member countries
• at the off-balance sheet level for the item "Third-party Assets Held for Resident Clients", it is necessary to indicate the country of the issuer of the deposited asset and the economic sector of the resident client who made the deposit.
  For the item "Third-party Assets Held for Non-Resident Clients", it is necessary to indicate the country of the client who made the deposit and the economic sector of the Luxembourg issuer of the deposited asset.
  For the item "Third-party Assets Held for Non-Resident Clients where the Issuer is also a Non-Resident", it is necessary to indicate the country of the client who made the deposit, while the economic sector is not to be broken down.

3.2.2. Modifications of Asset, Liability, and Off-Balance Sheet Items

• the item "Financial Derivatives" is removed from both the asset and liability sides of the balance sheet
• the item "Money Market Securities" is removed due to the difficulty inherent in the correct identification of money market securities. Henceforth, money market securities are to be included under the item "Debt Securities Held" and/or "Debt Securities Issued" depending on whether they are asset and/or liability items of the balance sheet.
• at the asset level of the balance sheet, a new item titled "Money Market Fund Shares" is introduced to record shares issued by money market funds appearing on the official list of monetary financial institutions and held in portfolio by credit institutions.
• at the liability level, the item "Capital and Reserves" is split into two separate items, the item "Provisions and Value Adjustments" is also split into two distinct items, and the items "Capital-like Elements" and "Results" are added.
• at the off-balance sheet level, the item "Third-party Assets Held by the Institution" is split into two items, namely "Third-party Assets Held for Resident Clients" and "Third-party Assets Held for Non-Resident Clients". In addition, the item "Guarantees and Counter-guarantees" is introduced.

4. Integration of ECB Requirements into BCL Statistical Collection

As the requested modifications do not fundamentally question the current architecture of tables S1.1 "Monthly Balance Sheet" and S2.5 "Quarterly Balance Sheet", it was decided to maintain the existing tables while incorporating the aforementioned additional information.
The detail of the breakdowns as well as the description of the items of the various tables are presented in the update of the "Collection of Instructions to Banks". As the ECB has established a "Compilation Guide on Money and Banking Statistics" (www.ecb.int) which is regularly updated when questions and/or problems arise, the BCL will adjust the collection as needed in light of the ECB's guide. The tables will continue to be filled in in the capital currency, with conversions made at the exchange rate on the day of the table's preparation, in accordance with the rules detailed in the "Definitions and Preliminary Comments" (XVI.12.c. of the Collection of Instructions to Banks).

5. Quality of Data Transmitted

In accordance with existing instructions, asset and liability amounts are to be broken down according to the economic sector of the counterparty.
The results of the analysis of aggregated data from the financial center reveal substantial differences between deposits and interbank claims in Luxembourg, whereas correct identification of counterparties should nevertheless lead, at the aggregated figures of the financial center, to equality between deposits and interbank claims. It is therefore reminded to the concerned institutions to scrupulously ensure the correct identification of their counterparties and to use for this purpose, in particular, the official list of credit institutions published by the Commission de Surveillance du Secteur Financier as well as the official list of MFIs made available to reporting institutions on the ECB website. We therefore deem it necessary to once again emphasize the importance of the quality of data transmitted to the BCL and the necessity of subjecting data to detailed verification rules in the technical documentation before transmission. Only rigorous control performed at the time of data production will allow meeting both quality requirements and imposed deadlines. This point is all the more important as the data thus collected will be controlled by the ECB services before their aggregation with data from other Member States. Any significant error or negligence will have damaging repercussions on the reputation of the entire national banking community.

6. Respect of Reporting Deadlines

The BCL will establish and communicate, by circular, to credit institutions a table listing the precise dates on which the monthly and quarterly statistical tables are to be submitted to the BCL.
It is reminded to the concerned credit institutions that the BCL must transmit monthly statistical reports to the ECB within a period of 15 working days and quarterly statistical reports within a period of 28 working days following the period to which they relate. It is therefore indispensable that institutions scrupulously respect the delivery deadlines defined in this circular so that the BCL can meet its commitments within the ESCB. In particular, for credit institutions subject to the ESCB's reserve requirement regime, it is indispensable that the BCL has the aforementioned monthly statistical reports within the prescribed deadlines in order to determine the amount of the reserve requirement to be maintained by each concerned institution.

7. Implementation of the New Collection

The submission of this information is mandatory starting from the period ending respectively in late January and late March 2003. The modified tables S1.1 and S2.5 of April 2002 will thus be delivered respectively by 14 February 2003 and 20 April 2003 at the latest.
This circular repeals and replaces with effect from 1 January 2003 Circular BCL 2000/158 of 25 February 2000 and Circular IML 97/138 of 25 September 1997.

Please accept, Ladies and Gentlemen, the assurance of our most distinguished sentiments.

BANQUE CENTRALE DU LUXEMBOURG
The Management
Serge KOLB Andrée BILLON Yves MERSCH

Annexes: 2