New financial sector delineation in ESA 2010:First assessment for the financial accounts in Austria

Workshop on SNA 2008 / ESA 2010OECD - October 2011

Michael Andreasch (michael.andreasch@oenb.at)

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Content

• Sector classification according to ESA 1995 and ESA 2010• Content of each sector• Classification in practice – possibilities and challenges

draft version (work in progress)• What have we achieved – and what not?

Proposal for further steps

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Central bank S.121Central bank S.121

Other MFI S.122

Money market funds S.123

Insurance corporations S.128

Captive Financial Institutions S.127

Financial Auxiliaries S.126

Non-MMF S.124

Other MFI S.122

Pensions funds S.129

Other financial intermediariesS.123

Financial auxiliariesS.124

Insurance corporations and pensions fundsS.125

Other financial intermediaries S.125

Non-financialcorporations S.11

Holdingcompanies, SPEs

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Central bank S.121

Other MFI S.122

MMF S.123

•The classification will be made under the responsibility of the central bank in Austria.The ECB is providing a list of MFIs including MMFs.•Data on each sub-sector on a who-to-whom basis are available in Austria.

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Non-MMF S.124

• Classification in Austria is based on national legislation:Funds registered in Austria according to the “Investment fund law” and “Real estate fund law”.

• The classification will be made under the responsibility of the central bank in Austria.

• Data on the sub-sector on a who-to-whom basis are available in Austria.

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Other financial intermediariesS.125

Financial corporations „engaged in lending“

Financial vehicle corporations engaged in securitisation transactions (FVC)

Security and derivative dealers (SDD)

Specialised financial corporations

Financial leasing (FLC)Hire purchase and the provision of personal or commercial finance (HP)

Factoring (FA)

Venture and development capital companies (VC)

Export/import financing companies (EIF)

Financial intermediaries vis as vis MFI only (FIM)

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• Classification in Austria is mainly based on national legislation according to the banking law (except for VC, EIF) and will be made under the shared responsibility of the central bank and the central statistics office in Austria.

• Challenges: At present there is an unclear situation classifying “financial leasing” in Austria: different views how to classify entities included in “real estate leasing activities”(NACE 2008 classification) based on information derived from the company register (influenced by national tax legislation) and credit register (based on banking supervisory treatment and even IAS)

• Data on FVC, SDD and FLC are available in Austria. Data on all other units are (partly) difficult to achieve and partly not important in Austria

?

Other financial intermediaries S.125

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Financial Auxiliaries S.126

Insurance/loan/securities broker, financial serviceconsultants Payment institutions

Corporations providing stock exchange and insurance exchange as well as infrastructure for financial markets, arranging derivative/hedging instruments, manage the issue of guarantees, …

Central supervisory authorities (separate units only)

Managers of pension funds, mutual funds, etc.

Head offices of financial corporationsclassification by convention according to ESA 2010based on NACE 2008 classification

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• Classification in Austria is partly based on national legislation; for head-offices based on type of activity (NACE 2008: 70.100), equity holdings of daughter companies in the balance sheets, turnover, number of employees (at present: 47 out of 3377), but:

• The classification will be made under the shared responsibility of the central bank and the central statistics office in Austria.

• Data on payment institutions, managers of mutual/pensions funds are available on a quarterly basis. All other units are under consideration (annual balance sheet data, FDI data)

Financial Auxiliaries S.126

Head-offices Holdingsequity as % of total liabilities 65% 78%Turnover / Total liabilites ratio < 40% (76%) < 40% (71%)Number of employees < 10 (85%) < 10 (95%) of which: 0 (41%) 0 (60%)

?

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Captive Financial InstitutionsS.127

Trusts, estates, brass plate companies

Special Purpose Entities (SPE)partly previously included in S.11,delineation to S.13Sovereign Wealth Funds (if classified as S.12)

Holding companies of financial and non-financialcorporationsbased on NACE 2008 classification

Units providing financial services with own funds or fundsprovided by a sponsor

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• There is nearly no legal legislation for these units; holdings are classified in line with NACE 2008 classification (NACE 2008: 64.200)

• Challenge: Correct allocation of the type of economic acitivity(see S.126)

• The classification will be made under the shared responsibility of the central bank and the central statistics office in Austria.

• Data on holding companies, SPE with cross-border activities on an annual basis using balance sheet data, FDI data (counterpart data information under consideration) should be available.

Captive Financial Institutions S.127

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Insurance corporations S.128

Pensions funds S.129

• Classification in Austria is based on national legislation:Insurance corporations and pension funds are defined by law The reporting of IC is based on “home country” principle.Open issues:

Issuer of standardised guarantees (ICPF, Banks Gov.,..) ?Pension Manager ?

• The classification will be made under the responsibility of financial market supervisory body (FMA).

• Data on the sub-sectors (on a who-to-whom basis for assets only) are available in Austria.

?

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What have we achieved up to now …

• Comparison between ESA 1995 and 2010 on major changes in the sector delineation

• Identification of important amended / new entities in the financial sector

• First assessment for the financial account in Austria

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Data sourcesData availability

Direct datasource

Reports byother entities

Population

Sub-sector of the financial sector

Central bank S.121 Y Y (Reports)  SHS 1Other MFI excluding MMF S.122 Y Y (Reports)  SHS, ICPF 780Money market funds S.123 Y Y (Reports)  BSI, SHS 24Non-MMF S.124 Y Y (Reports)  BSI, SHS 2.179Other financial intermediaries S.125

Partly Y (Reports, BS data)

BSI, SHS, ICPF > 150

Financial auxiliaries S.126 Partly Y (Reports, BS data)

BSI, SHS, ICPF; (for head-offices under consideration)

> 100

Captive financial institutionsS.127

Partly Y (Reports, BS data)

for holdings under consideration

> 2.000

Insurance corporations S.128 Y Y (Reports) BSI, SHS 59Pension funds S.129 Y Y (Reports) BSI, SHS 17

Reports = defined reporting requirements to the NCB. BSI = Banking Statistics, SHS = Security holdings statistics, ICPF = Statistics provided by insurance corporations and pension funds. BS = Balance sheet data.

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-50

0

50

100

150

200

250

300

350

400

Position according to ESA 95

Amendments in line with ESA 2010

Position according to new data sources

Financial position of the financial sector and NFC - comparing ESA1995 and ESA 2010% of GDP

Source: OeNB.

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… – and what not, next steps:

• Coordinated work on the classification of head-offices, holding companies and leasing companies between NSI and Central bank with the aim of a harmonized list of entities

• Investigation on amendments of reports to the Central bank improving reporting guidelines and exchange of information on (selected) individual entitiesChallenge: Distinction between head offices (if part of sector S.11) and holding companies in counterpart statistics (like banking statistics, ICPF statistics, security holdings statistics by custodians).

• Work on the integration of balance sheet data as part of the regular compilation and

• Investigations on the compilation of back-data