1. MFI balance sheet statistics compiled by the Bulgarian National Bank Daniela Dobreva Monetary and Banking Statistics Division Statistics Directorate Bulgarian National Bank Dobreva.D@bnbank.org 3 October 2013

2. Content 1. Statistics Directorate of the BNB Statistics Directorate of the BNB Statistics Directorate of the BNB 2. Legal framework Legal framework Legal framework 3. BSI data collection process at the BNB BSI data collection process at the BNB BSI data collection process at the BNB 4. Required breakdowns Required breakdowns Required breakdowns 5. Compilation of flow statistics Compilation of flow statistics Compilation of flow statistics 6. Monthly BSI data dissemination Monthly BSI data dissemination Monthly BSI data dissemination 2

3. 1. Statistics Directorate of the BNB  Main responsibilities of the Statistics Directorate  Organisational structure of the Statistics Directorate  Monetary and Banking Statistics Division 3

4.   To prepare and provide statistical information to the users in accordance with the approved formats and deadlines;   To prepare and provide statistical information to the Governing Council and to the different structures of the bank;   To prepare and provide statistical information to the ECB, Eurostat, IMF (incl. Special Data Dissemination Standard (SDDS)) and other international financial institutions;Special Data Dissemination Standard (SDDS)   To develop and improve the applied statistical methodologies in accordance with the international standards and national legislation; Main responsibilities of the Statistics Directorate 1/2 4

5.   To participate in statistical working groups and committees of ECB and Eurostat as well as to contribute to the discussions regarding proposed amendment of current methodologies and the preparation of new ones;   To participate in the National Statistical Council, where statistical bodies are presented; Main responsibilities of the Statistics Directorate 2/2 5

6. Organisational structure of the Statistics directorate (as of September 2013) Statistics Directorate (43) Balance of Payments and External Statistics Division (16) Monetary and Banking Statistics Division (15) Financial Accounts and General Economic Statistics Division (7) Statistical Information Management Division (3) 6

7. Monetary and banking statistics division is mainly responsible for:   Monetary statistics;   Deposits and loans by economic activities and amount categories;   Interest rates statistics;   Long term interest rate for convergence assessment purposes;   Lease activity statistics;   Corporations specializing in lending statistics;   Statistics on insurance, reinsurance and health insurance companies;   Statistics of financial vehicle corporations (FVCs) engaged in securitisation; Monetary and banking statistics division 1/2 7

8.   Register of financial institutions (RIAD);   Payment statistics (in cooperation with Bank Policy Directorate);   Consolidated banking statistics (in cooperation with Macro-prudential Analysis and Strategy Directorate);   Statistics on electronic money;   Other. Investment funds statistics and Security issues and holdings statistics are also compiled by the Statistics directorate under the responsibilities of the Balance of payments and external debt statistics division. Monetary and banking statistics division 2/2 8

9. 2. Legal framework  Legal framework for statistical data collection  European statistical standards and legal base for the compilation of BSI statistics 9

10. Article 5 of the Statute of the ESCB and of the ECBArticle 5 of the Statute of the ESCB and of the ECB: Collection of statistical information 5.1. In order to undertake the tasks of the ESCB, the ECB, assisted by the national central banks,shall collect the necessary statistical information either from the competent national authorities or directly from economic agents. For these purposes it shall cooperate with the Union institutions, bodies, offices or agencies and with the competent authorities of the Member States or third countries and with international organisations. 5.2. The national central banks shall carry out, to the extent possible, the tasks described in Article 5.1. Legal framework for statistical data collection 1/4 10

11. Collection of statistical information (cont’d) 5.3. The ECB shall contribute to the harmonisation, where necessary, of the rules and practices governing the collection, compilation and distribution of statistics in the areas within its fields of competence. 5.4. The Council, in accordance with the procedure laid down in Article 41, shall define the natural and legal persons subject to reporting requirements, the confidentiality regime and the appropriate provisions for enforcement. for statistical data collection Legal framework for statistical data collection 2/4 11

12. Council Regulation № 2533/98Council Regulation № 2533/98 concerning the collection of statistical information by the European Central Bank (amended by Council Regulation № 951/2009):   Article 1 (1): The ECB’s statistical reporting requirements’ shall mean the statistical information which reporting agents are required to provide and which is necessary for the tasks of the ESCB to be performed.   Article 4: Member States shall organise themselves in the field of statistics and shall fully cooperate with the ESCB in order to ensure the fulfilment of the obligations arising out of Article 5 of the Statute. for statistical data collection Legal framework for statistical data collection 3/4 12

13. Law on the Bulgarian National Bank:   Article 42: The Bulgarian National Bank shall compile the balance of payments, monetary and interest rate statistics, as well as financial account statistics of Bulgaria. For this purpose, all government and municipal authorities, as well as legal entities and physical persons, shall provide information to the Bulgarian National Bank in accordance with a procedure established by the Bulgarian National Bank. for statistical data collection Legal framework for statistical data collection 4/4 13

14. 1. 1.European System of Accounts (ESA’95) and System of National Accounts (SNA’93). 2. 2.Regulation (EC) No 2423/2001 of the European Central Bank (November 2001) concerning the consolidated balance sheet of the monetary financial institutions sector (ECB/2001/13) as recast in ECB/2008/32;ECB/2008/32 3. 3.Guideline of the ECB (August 2007) on monetary, financial institutions and markets statistics (recast) (ECB/2007/9)(amended by ECB/2008/31; ECB/2009/23);ECB/2007/9ECB/2008/31 ECB/2009/23 4. 4.Manual on MFI Balance Sheet Statistics (April 2012);Manual on MFI Balance Sheet Statistics (April 2012) 5. 5.Monetary Financial Institutions and Markets Statistics Sector Manual (March 2007).Monetary Financial Institutions and Markets Statistics Sector Manual (March 2007) European statistical standards and legal base for the compilation of monetary European statistical standards and legal base for the compilation of monetary statistics 1/2 14

15. In the field of monetary statistics the implementation of the following requirements is forthcoming in January 2015: 1. 1.System of National Accounts 2008; 2. 2.European System of Accounts 2010; 3. 3.Regulation (EC) No xx/2013 of the European Central Bank concerning the consolidated balance sheet of the monetary financial institutions sector (ECB/2013/xx); 4. 4.Guideline of the ECB (ECB/2013/xx) on monetary, financial institutions and markets statistics (currently under preparation); European statistical standards and legal base for the compilation of monetary European statistical standards and legal base for the compilation of monetary statistics 2/2 15

16. 3. BSI data collection process at the BNB  Reporting population – Monetary financial institutions (MFIs)  Data reception  Quality checks 16

17. MFIs comprise resident credit institutions as defined in Community law, or another resident financial institutions whose business is to receive deposits and/or close substitutes for deposits from entities other than MFIs and, for their own account (at least for economic terms), to grant credits and/or make investments in securities. (Regulation ECB/2008/32, Article 1). Substitutability of deposits is determined by the liquidity of the liability instrument concerned, combining characteristics of transferability, convertibility, certainty and marketability, and having regard, where appropriate, to their term of issue. Detailed information on these characteristics is included in Regulation ECB/2008/32, Annex I, Part I). Bulgarian National Bank collects monetary statistics data from the census of reporting agents, i.e. no grossing-up is performed due to cutting-off the tail as a result of derogations granted to reporting agents. Reporting population – Monetary financial institutions (MFIs) 1/2 17

18. * Number of the Bulgarian MFIs as of September 2013 Reporting population – Monetary financial institutions (MFIs) 2/2 MFIs - (money-issuing sector) - 37 - Central bank Credit institutions - 30 - (o/w 6 branches of foreign banks) Money market funds (MMFs) - 6 - Institutions issuing electronic money Other financial institutions which meet the definition 18

19. 1. 1.The reporting agents provide to the BNB aggregated checked data in accordance with a predefined calendar:   Monthly data – balance sheet items (BSI) stocks and flows data - by the 7 th working day of the month following the reporting period;   Quarterly data – stocks data on deposits and loans by amount category and economic activity and geographical breakdown of the non-resident sector - by the 15 th working day of the month following the reporting quarter. Data reception 1/2 19

20. 2. 2. The data are reported via established secured Virtual private network (VPN) between the BNB and the reporting agents thus ensuring protection of the provided information; 3. 3. After basic syntactical checks are performed (files are complete and meet predefined technical format) the data are directly loaded to the monetary statistics information system; 4. 4. When loaded the provided reporting forms are automatically checked for internal consistency and for consistency between them. This stage also includes cross-checks between forms with different frequencies. These checks are provided in advance to the reporting agents in order to run the checks prior to data submission to the BNB; 5. 5. Reporting agent monitor the status of processing of the provided data via web based portal. Data reception 2/2 20

21. In the next 5 working days following the reception of the data provided by the reporting agents the division performs further quality control in addition to the linear checks automatically processed by the IT system:   Analysis of the evolution of the series and the development of each indicator;   Checking plausibility of the latest figure in terms of changes in behavior and outliers detection;   Analysis the data based on the available additional information;   Etc. Quality checks 1/2 21

22.   In case that there are significant changes in particular indicator or specific development of a time series the reporting agents are obliged to provide simultaneously with the data transmission additional information about the reasons behind series evolution via the IT system;   If the provided explanation is deemed not sufficient the monetary statistics’ experts require further information from the reporting agents in order to verify the plausibility of the data (either via the IT system or via phone call);   The information needed shall be provided by the reporting agents in between the 5 w.d. following the initial reception of the data. This deadline also applies to the provision of any amendments to the data occurred as a result of the performed quality control. Quality checks 2/2 22

23. 4. Required breakdowns  Instrument categories and maturity bands  Counterparties  Currency structure 23

24. Instrument categories and maturity bands 1.Purpose - these breakdowns are collected in order to identify M3 components and counterparts. 2.Instrument categories into which the reporting agents shall place the financial instruments found at national level are described in Regulation ECB/2008/32, Annex I, Part 8. 3.Maturity bands refer to the original maturity of the instrument. 4.Valuation rules – main characteristics:  All financial assets and liabilities are reported on a gross basis – netting of assets and liabilities is not allowed;  Deposits and loans shall be reported at nominal amount outstanding at the end of the month;  Loans may be reported at less than nominal value in case they have been written off or written down;  Securities are to be reported at market value;  Differences with ESA’95 exist – for example recording of accrued interest. 24

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26. Instrument categories and maturity bands – further breakdowns for selected instruments In addition to the main instrument and maturity breakdowns Regulation ECB/2008/32 requires further detailisation of some balance sheet positions. For example: 1. Loans: information for syndicated loans, revolving loans and overdrafts, convenience and extended credit card credit and loans backed by real estate collateral; information for syndicated loans, revolving loans and overdrafts, convenience and extended credit card credit and loans backed by real estate collateral; loans granted to sector Households and NPISH are broken down by the purpose of the loan into consumer loans, loans for house purchases, other loans (loans to sole proprietors and unincorporated partnerships are also included); loans granted to sector Households and NPISH are broken down by the purpose of the loan into consumer loans, loans for house purchases, other loans (loans to sole proprietors and unincorporated partnerships are also included); original maturity bands of the loans are further broken down into remaining maturity and interest rate reset (example: loans with original maturity over 1 year, o/w with remaining maturity of less than one year and interest rate reset in the next 12 months). original maturity bands of the loans are further broken down into remaining maturity and interest rate reset (example: loans with original maturity over 1 year, o/w with remaining maturity of less than one year and interest rate reset in the next 12 months). 2. Debt securities issued – o/w position of securities up to 2 years and nominal capital guarantee below 100 %. 26

27. Counterparties 1/2 1.Purpose – the breakdown is required to separately identify:  Money issuing sector – MFIs;  Money holding sector – General government (excl. Central government), Other financial institutions, Insurance corporations and pension funds, Non-financial corporations, Households and NPISH. 2.Guidance for statistical classification of the customers of the MFIs is provided in the Money and banking statistics sector manual which follows classification principles that are consistent with ESA’95 27

28. Counterparties 2/2 Residency of the counterparties  Domestic resident  Euro area member states  EU member states outside the euro area  Resident of Rest of the world (RoW) sector – outside the EU Residency concept: Resident shall mean having a centre of economic interest in the economic territory of a country (Regulation EC/2533/98, Article 1 and Regulation ECB/2008/32, Article 1) 28

29. In addition to the main counterparties’ breakdowns Regulation ECB/2008/32 requires further detailisation of selected positions vis-à-vis central counterparties and financial vehicle corporations engaged in securitisation transactions (FVCs). 29

30. Currency structure For all relevant balance sheet indicators monthly amounts denominated in the following currencies are reported by the MFIs:  Bulgarian Lev (BGN);  Euro (EUR);  Swiss Franc (CHF);  US Dollar (USD);  Danish Krone  Danish Krone (DKK);  Swedish Krona (SEK);  British Pound (GBP);  Japanese Yen (JPY);  Other currencies. 30

31. 5. Compilation of flow statistics  Flow statistics – ESA’95 definitions  Types of flow adjustments  Derivation of data on financial transactions  Data on transactions compiled by the BNB  Calculation of exchange rate adjustments  Types of reporting forms for the purpose of flows statistics 31

32. Flows The system records two basic kinds of information: flows and stocks. Flows refer to actions and effects of events that take place within a given period of time, while stocks refer to positions at a point of time. ESA’95 Para 1.31: The system records two basic kinds of information: flows and stocks. Flows refer to actions and effects of events that take place within a given period of time, while stocks refer to positions at a point of time. ESA’95 Para 1.32: Flows reflect the creation, transformation, exchange, transfer or extinction of economic value. They involve changes in the value of an institutional unit’s assets or liabilities. Economic flows are of two kinds: transactions, and other changes in assets. Transactions appear in all accounts and tables where flows appear, except the other changes in volume of assets account and the revaluation account. Other changes in the assets appear only in these two accounts. Flow statistics – ESA’95 definitions 1/3 32

33. Financial transactions Financial transactions are transactions in financial assets and liabilities between institutional units, and between them and the rest of the world. ESA’95 Para 5.01: Financial transactions are transactions in financial assets and liabilities between institutional units, and between them and the rest of the world. ESA’95 Para 5.02: ….. a financial transaction is an interaction between institutional units, or between an institutional unit and the rest of the world, by mutual agreement, involving a simultaneous creation or liquidation of a financial asset and the counterpart liability, or a change in ownership of a financial asset, or an assumption of a liability. Flow statistics – ESA’95 definitions 2/3 33

34. Financial transactions The financial assets held and the liabilities outstanding at a particular point in time (of a sector or the rest of the world) are recorded in the balance sheet. Financial transactions result in changes in balance sheets. However, the changes between the opening balance sheet and the closing balance sheet may also include other flows. They are not due to interactions between institutional units, or between them and the rest of the world, by mutual agreement. The other flows are broken down into revaluations in financial assets and liabilities, and changes in the volume of financial assets and liabilities not due to financial transactions. The former are recorded in the revaluation account and the latter in the other changes in the volume of assets account under the categories catastrophic losses, uncompensated seizures, other volume changes in financial assets and liabilities n.e.c., and changes in classifications and structure. ESA’95 Para 5.09: The financial assets held and the liabilities outstanding at a particular point in time (of a sector or the rest of the world) are recorded in the balance sheet. Financial transactions result in changes in balance sheets. However, the changes between the opening balance sheet and the closing balance sheet may also include other flows. They are not due to interactions between institutional units, or between them and the rest of the world, by mutual agreement. The other flows are broken down into revaluations in financial assets and liabilities, and changes in the volume of financial assets and liabilities not due to financial transactions. The former are recorded in the revaluation account and the latter in the other changes in the volume of assets account under the categories catastrophic losses, uncompensated seizures, other volume changes in financial assets and liabilities n.e.c., and changes in classifications and structure. Flow statistics – ESA’95 definitions 3/3 34

35. 35 Types of flow adjustments 1. Reclassifications * an alteration in statistical coverage of the MFI population (inclusion or exclusion of MFIs if the business has been transferred into or out of the MFI sector); * the reclassification of counterparties (for example: residency, privatisation) and of assets or liabilities (for example: if a loan becomes negotiable); * reporting errors that have been corrected in the stocks only over a limited time range and effects of changes in structure - i.e. mergers, divisions and acquisitions, which usually leads to changes in valuation of financial instruments and involves some restructuring of reporting institutions. 2. Revaluation adjustments Write–offs and write downs of loans Price revaluation adjustments of securities 3. Exchange rate adjustments

36. There are two approaches of obtaining data on financial transactions: 1. 1. As a sum of all financial transactions concerning particular indicator for the reference reporting period (transactions method); 2. 2. Derivation of financial transaction as a difference between stock positions at end of period reporting dates and then removing all changes that arise due to due to reasons other than transactions (balance sheet method) as:   Reclassifications;   Revaluation adjustments;   Exchange rate adjustments. Derivation of data on financial transactions 36

37.   Data on transactions for indicators Securities, other than shares (assets and liabilities) and Shares and other equity are directly reported by the reporting agents to the BNB  For the rest of the balance sheet items financial transactions are calculated as follows: Trans t = S t – S t-1 – Recl t – WO t – ERA t Trans t – financial transactions during the reporting period; S t – stock as at the end of the reporting period; S t-1 – stock as at the end of the previous reporting period; Recl t – reclassifications and other adjustments during the reporting period; WO t – write-offs/write-downs of loans during the reporting period; ERA t – exchange rate revaluations. Data on transactions compiled by the BNB 37

38. Exchange rate adjustments are calculated on the basis of the monthly currency structure of the balance sheet instruments provided by the reporting agents. The following formula is applied: ERA - exchange rate adjustments; C – currency, other than BGN; C – currency, other than BGN; - exchange rate BGN/ (at the end of period t); - exchange rate BGN/ (at the end of period t); - exchange rate BGN/ (at the end of period t-1); - exchange rate BGN/ (at the end of period t-1); - exchange rate BGN/ (average for the period t); - exchange rate BGN/ (average for the period t); - stock in currency C, denominated in BGN (at the end of period t); - stock in currency C, denominated in BGN (at the end of period t); stock in currency C, denominated in BGN (at the end of period t-1). - stock in currency C, denominated in BGN (at the end of period t-1). Calculation of exchange rate adjustments 38

39. Flows’ statistics reporting forms directly collected from the reporting agents are divided into three major groups:   Net financial transactions with securities;   Write-offs/write-downs of loans;   Reclassifications. Types of reporting forms for the purpose of flows statistics 39

40. Financial transactions with securities are: issue, acquisition, sale, maturity, buy back and re-sale of securities. Exchange of one security with another, conversion of debt securities into equity securities are also treated as financial transactions; Net financial transactions represents the difference between the value of all securities acquired/issued and the securities sold/matured/re-sold. Purchase and the consequent sale of a security at the same reporting period are also included in the net financial transactions Net financial transactions with securities Net financial transactions with securities 40

41. For BSI purposes loans are recorded at nominal value gross of provisions.   Write-off - discontinuation of the on-balance sheet presentation of loan which is being considered with no value;   Write-down – direct reduction of the carrying amount of a loan on the balance sheet due to its impairment and the loan is about to be repaid partially. Write-offs/write-downs of loans Write-offs/write-downs of loans 41

42. Reclassifications of assets and liabilities predominantly occurs at the following cases:   Alteration in statistical coverage of the MFI population (inclusion or exclusion of MFIs if the business has been transferred into or out of the MFI sector);   Changes in structure of the reporting agents (mergers, divisions and acquisitions);   Change of the sector classification of a client;   Change in the instrument category as a result of amendments of legal acts or accounting rules;   Correction of reporting errors. Reclassifications 42

43. 6. Monthly BSI data dissemination  Monthly monetary statistics dissemination preparation  Publication of monthly monetary statistics  Publication “Monetary statistics” and statistical data base  Overview of the published data 43

44. Monthly monetary statistics dissemination preparation This stage takes place between the 12 th and 17 th working day following the end of the reference month and includes:  Preparation of reports in a predefined structure to perform further analyses of the data;  Preparation of reports for internal users;  Data to be published at the web site of the BNB - press release, publication “Monetary statistics”, data base, table “ Macroeconomic indicators”;  Data included in different BNB publications: Monthly bulletin, Annual and Semi- annual reports of the BNB etc.;  Data to be provided to the international organisations – ECB, IMF, BIS, etc. 44

45. 1.Press release Press releasePress release 2.Publication “Monetary Statistics” Publication “Monetary Statistics”Publication “Monetary Statistics” 3.Statistical data base on the web site of the Bulgarian National Bank Statistical data base on the web site of the Bulgarian National BankStatistical data base on the web site of the Bulgarian National Bank 4.Macroeconomic indicators Macroeconomic indicatorsMacroeconomic indicators 5.Monthly bulletin of the BNB Monthly bulletin of the BNBMonthly bulletin of the BNB 6.Annual and semi-annual reports of the BNB Annualsemi-annualAnnualsemi-annual Publications from 1 to 4 are available at the web site of the BNB under section: Statistics → Monetary and interest rate statistics → Monetary statistics → Monetary statistics Statistics → Monetary and interest rate statistics → Monetary statistics → Monetary statistics Publications 5 and 6 are available on hard copy and electronically at BNB web site under section: Research and publications → BNB periodical publications Research and publications → BNB periodical publications Publication of monthly monetary statistics 45

46. 1. 1. Content  Publication “Monetary statistics” and statistical data base contain balance sheet data of the BNB and other MFIs with two levels of presentation – aggregated and consolidated data;  The data is broken down by residency, sector, instrument, maturity and currency - national and foreign (of which euro);  The instruments are grouped in order to facilitate the analysis of broad money, its components and counterparts as well as to identify other indicators necessary for performing of macroeconomic analysis. 2. - monthly 2. Frequency - monthly 3. - in accordance with the Calendar for dissemination of statistical data, 3. Timeliness - in accordance with the Calendar for dissemination of statistical data,Calendar for dissemination of statistical dataCalendar for dissemination of statistical data published at the BNB web site Publication “Monetary statistics” and statistical data base 1/2 46

47. Publication “Monetary statistics” and statistical data base 2/2 4. Types of tables  Dynamic – presenting information for several reporting periods;  Static – containing data only for one reporting (i.e. sectoral and currency structure of balance sheet instruments). 5. Coverage  Publication “Monetary statistics” – presents data for the latest 12 periods for dynamic tables and for the last reporting period for static tables;  Data base – includes back data starting from 1995 for the majority of the indicators (dynamic and static tables) 47

48. Overview of the published data 1.Short Monetary Survey 2.Detailed Monetary Survey 3.BNB Analytical Reporting 4.Analytical Reporting of Other MFIs 5.Foreign Assets and Liabilities of the BNB 6.Loans to Non-financial Corporations, Households and NPISHs 7.Memorandum to the Analytical Reporting of the BNB 8.Memorandum to the Analytical Reporting of Other MFIs 9.Monthly Sectoral Survey of the BNB 10.Monthly Sectoral Survey of other MFIs 11.Monetary Aggregates - Stocks and Transactions 12.Counterparts of Monetary Aggregates Stocks and Transactions 48

49. 49 Thank you for your attention!