Local Claims of Foreign Affiliates in Local Currency
The principal balance sheet items to be included as claims (i.e. assets) are deposits and balances placed with banks; derivatives; loans and advances; holdings of debt securities; and investment equity securities (i.e. those held with the intention of sale at a profit, excludes equity securities in associated entities). The value includes interest and principal in arrears where appropriate.
                                                                                                                          
Loans should comprise those financial assets that are created through the lending of funds by a creditor (lender) to a debtor (borrower) and that are not represented by negotiable securities. Deposits should comprise all claims reflecting evidence of deposit - including non-negotiable certificates of deposit - that are not represented by negotiable securities. Thus, loans and deposits should include interbank borrowings, loans and inter-office balances.
                                                                                                                                  
Special types of loans to be classified in the category 'loans and deposits' are foreign trade-related credits (refer below) and international loans received and granted and deposits received and made on a trust basis (refer below).
                                                                                                                                           
Foreign trade-related credits mainly occur in one of two forms: as buyers' credits or as suppliers' credits. A buyer's credit is granted directly by a reporting entity to a foreign importer and therefore represents an external asset that should be included in the vocational statistics. In contrast, a supplier's credit is granted directly by a reporting entity to a domestic exporter. However, this credit may be extended on the basis of a trade bill that is drawn by the exporter on the importer and subsequently acquired by the reporting entity. These credits may therefore be treated as external or domestic assets depending on whether the residency of the drawee (who is the final debtor) or of the presenter of the bill (who has guaranteed payment by endorsing the bill) is used as the criterion for geographical allocation. For the purposes of the vocational banking statistics, it is recommended that suppliers' credits be allocated according to the residence of the drawee of the relevant trade bills, as the drawee is the final recipient of the credit extended. Reporting entities may acquire external trade bills 'à forfeit' and 'en pension'. An 'à forfeit' purchase is an outright purchase that absolves the seller/presenter of the bills from any obligation should the drawee fail to honour the bill when it matures. When the drawee is a non-resident, such bills should similarly be considered to be external assets, irrespective of the residence of the presenter. An 'en pension' acquisition involves a reporting entity purchasing a foreign trade bill under a sale and repurchase agreement with the domestic exporter whereby the reporting entity must or may return the bill to the exporter on, or prior to, the maturity date. If the return of the bill is optional, the bill is recorded in the balance sheet of the purchaser as a claim on the drawee. If the bill must be returned, the instrument remains in the balance sheet of the seller and the transaction can be regarded as an advance to the domestic exporter that should not be included in the vocational statistics as a foreign asset.
                                                                                                                                                                        
Funds on-lent or deposited on a trust basis in the reporting parties' own name, but on behalf of third parties, represent assets to be reported here. In
addition, securities issued by reporting parties in their own name but on behalf of third parties,  represent assets to be included here.
                                                                                                                                                               
Sale and repurchase transactions (repos) involving the sale of assets (e.g.. securities and gold) with a commitment to repurchase the same or similar assets, financial leases, promissory notes, non-negotiable debt securities, endorsement liabilities arising from bills rediscounted abroad and subordinated loans (including subordinated non-negotiable debt securities) should also be included. Borrowing and lending of securities and gold without cash collateral should not be reported here. The reporting of negative positions is accepted in those cases where it is the result of the short selling of securities acquired in the context of repo or bond lending transactions. Reporting parties' holdings of notes and coin that are in circulation and commonly used to make payments should be included.
                                                                                                                                               
Holdings of debt securities comprise all negotiable short- and long-term debt instruments (including negotiable certificates of deposit) and those debt securities held in the reporting parties' own name but on behalf of third parties as part of trustee business. Debt securities held on a purely custodial basis for customers and debt securities acquired in the context of securities lending transactions without cash collateral should not be included in the data on holdings of debt securities. It is recognised that the borrowing of securities that are subsequently sold to third parties may result in negative holdings of securities.