Eesti Pank - Bank of Estonia

In banking statistics the economy is divided into residents and non-residents categories. The sectors and sub-sectors used in both categories are the following (also see definitions in Appendix 1):

Financial corporations

Eesti Pank (the Central Bank)

Credit institutions (banks)

Insurance companies and pension funds

Other financial institutions

General government

Central government

Non-budgetary funds (inc. social security funds)

Local governments

Non-financial corporations

Commercial undertakings of state and local governments

Other commercial undertakings

Non-profit associations

Individuals

Currently, the monthly balance sheet of Eesti Pank is broken down into domestic and foreign assets and liabilities. In the future, domestic credit will be broken down into monetary institutions, central government and other.

1.2. Differences in the treatment of national accounts

The sectors of Estonian banking statistics correspond, in most cases, with the ESA 95. Only the 'Non-residents' sector does not distinguish between 'Member State of the EC' (S91), 'Institutions of the EC' (S92) and 'Third countries and international organisations' (S93). Links are shown in Appendix 2.

1.3. Identification of money-holding, money-creating and money-neutral sectors

The money-creating sector consists of Eesti Pank and credit institutions. Eesti Pank is the only issuer of notes and coins. Statistics and monetary data relate to assets and liabilities held by the credit institutions operating in Estonia (including branches and subsidiaries of non-resident credit institutions). Branches and subsidiaries of Estonian credit institutions operating abroad are not included.

The money-holding sector is comprised of the other financial institutions, the non-financial sector and the government sector. The general government does not have any right to central bank credit and it does not hold any remarkable deposits in the central bank. Government deposits in credit institutions are included within the money-holding sector's deposits. The general government's resident borrowing is very low compared to its deposits held in various credit institutions and the portion of government deposits held in money stock is remarkable.

There is no division within the money-neutral sector.

2.1. Definition of money

Estonia uses the currency board-based system. Eesti Pank does not use targets in the form of monetary aggregates to implement monetary policy. Nevertheless, it calculates and publishes information on three monetary aggregates: M0, M1 and M2.

Measures of money take into account the relevant liabilities of all credit institutions operating in Estonia and licensed by Eesti Pank, regardless of whether they are Estonian-owned, subsidiaries or branches of foreign banks.

2.2. Instrument breakdown of monetary aggregates

M0 includes:

currency in circulation (Estonian kroon notes and coins, including those held in credit institutions tills) and banks' demand deposits at Eesti Pank (as the required reserves are calculated on an average basis, there is no certain split of operational and required reserves so cash and banks' deposits at Eesti Pank are included in the total amount)

kroon accounts of non-residents held in Eesti Pank

CDs of Eesti Pank

M1 includes:

Currency in circulation (excluding the cash held in credit institutions' tills)

Estonian kroon demand deposits (including government and non-residents' deposits)

M2 includes:

Estonian kroon time, savings and other deposits (without reference to maturity - long-term deposits are rare in the Estonian banking system and moreover, all deposits are redeemable in a very short period of time; including government and non-residents' deposits)

All foreign currency deposits

2.3. Sectoral allocation of holdings of transferable instruments

Transferable instruments included in the monetary base are cash and certificates of deposit. Notes and coins held by foreigners are considered to be held by residents and are included as they are indistinguishable from each other. The only kinds of CDs included are the CDs issued by Eesti Pank and acquired by banks; their amount is imperceptible.

3.1. Domestic definition of a credit institution

The Law on Credit Institutions of 09 March 1999 concerning the status and supervision of credit institutions defines the legal provisions governing banking activity. It incorporates into Estonian legislation the EC directive of 15 December 1989 on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions (89/646/EEC) and the EC directive of 6 April 1992 on the supervision of credit institutions on a consolidated basis (92/30/EEC).

The term "Credit institutions" covers all Estonian credit institutions as well as their branches and subsidiaries abroad and foreign credit institutions which have branches or subsidiaries in Estonia. A credit institution is a private legal entity the main activity of which is receiving deposits or other repayable funds from the public and granting credit in their own name and account, or any other form of financing activity.

3.2. Universal banks

A universal banking principle has been adopted in Estonia. It means that all banks are entitled to conduct all types of banking activities allowed by the Law on Credit Institutions. The law applies to all credit institutions.

3.3. Other kinds of institutions

According to Estonian legislation it is possible to set up savings and loan associations whose members are the inhabitants of a certain local area. The savings and loan association is a financial institution whose main activity is offering financial services to its members. There is no special supervisory agent for savings and loan associations and they have no reporting obligation to any public organisation.

3.4. Collective investment institutions

The law governing collective investment institutions - the Investment Funds Act, entered into force on 19 May 1997. According to it, an investment fund is a pool of assets established for collective investment or a public limited company founded for collective investment, which is - or the assets of which are - managed, accordingly, on the principle of risk-diversification by a management company. The Ministry of Finance has the right to grant licences for investment funds. Data is collected by the Securities Inspectorate, which also acts as a supervisory authority over collective investment funds.

No separation has been made between money-market funds and other investment institutions. There is no monthly reporting obligation to Eesti Pank and the data of mutual funds is not included in the monetary statistics.

The monetary and banking statistics covers only Eesti Pank and the institutions which are under the regulation of The Law on Credit Institutions.

3.5. Number of monetary institutions

4.1. Liabilities side products

The main item on the liabilities side of universal banks is deposits. A distinction is made between demand deposits, time deposits, saving deposits and other types of deposits (see definitions in Appendix 3). Owing to their transferable nature, demand deposits collected from customers offer a rather low interest rate, the computational base of which may vary between credit institutions; i.e., the minimum or average outstanding amount over a predetermined period.

Time deposits cannot be converted into currency before the end of an agreed upon term without a penalty. Savings deposits also have an agreed upon maturity, but it is permissible to add money to the deposit account. However, during the last year several new kinds of deposits have appeared on the market offering features which are typical of both transactions and savings accounts.

Holders of debt securities issued by Estonian banks are supposed to be mainly foreign financial institutions. Some government lending funds and counterpart funds are also included on the bank's balance sheets, but the amount of these is not significant.

4.2. Assets side products

On the assets side, lending to other financial institutions and to the public dominates in banks' business. Credit institutions offer their customers a wide range of lending services - mortgage loans, consumer credit, current account advances, loans with fixed maturities and loans with floating interest rates.

The second main item on banks' assets is bonds. Banks may also place funds into holdings of shares and participation. The definitions of securities reflected in Estonian banking statistics are given in Appendix 4.

5.1. Legal references and powers

According to Article 2 of the Law on the Central Bank of the Republic of Estonia, Eesti Pank supervises all credit institutions within the Republic of Estonia. Article 17 of the same act states that Eesti Pank has the right to request data, documents, reports and agreements as well as request appropriate explanations in relation to any of these items from any credit institution.

Eesti Pank issues instructions regarding the technical presentation of the balance sheets and financial statements as well as the terms and procedures for the creation, publication and forwarding of the periodic statements. Pertinent rights are also described in the Law on Credit Institutions. In terms of monetary statistics Eesti Pank covers both functions - collecting and compiling.

Eesti Pank has no legal rights to collect data from the other financial institutions. However, since March 1998 Eesti Pank has been collecting and compiling data on leasing companies. A contract with the Estonian Leasing Association serves as the basis for collecting and publishing this data.

The Official Statistics Act does not extend to monetary statistics and there are no statistical restrictions on Eesti Pank to publish the data of individual banks. Article 21 of the Law on the Central Bank of the Republic of Estonia states that, in regards to the confidentiality of information and disclosure of information, Eesti Pank shall be entitled to publish the data of credit institutions at its disposal, provided that such data does not compromise bank secrets. Article 46 of the Law on Credit Institutions, which defines bank secrecy, states that the following information is not considered a bank secret:

Up until December 1999 Eesti Pank published the balance sheet data of individual banks. Since January 2000 a new regulation introduced by Eesti Pank concerning the detailed disclosure requirements for banks has been prepared in force. This regulation transfers the responsibility of disseminating the balance sheets as well as a wide range of other data to the banks themselves.

6.1. Main monthly statements available for credit institutions

A large variety of different data is collected to support the three main responsibilities of Eesti Pank:

banking supervision

implementation of monetary and banking policy

management of currency circulation and running the payment settlement system

During recent years several improvements have been made in data collecting, processing and dissemination to meet analysts' requirements for increasing the quantity and complicity of data. Almost all reports are collected using electronic means of forwarding data. Regular reports are listed in Appendix 5.

6.2. Methodological rules in monthly reporting procedures for credit institutions

In accordance with the Law on Credit Institutions all Estonian banks and branches of foreign banks acting in Estonia have a reporting obligation.

Eesti Pank establishes for credit institutions the

content of reporting and the methods of its compilation;

periodicity of reporting;

deadlines for reports;

structure of the explanatory notes;

minimum amount of information to be disclosed and the deadlines;

methods of consolidated reporting.

In addition, the prudential ratios, instructions on how to calculate them and the procedures for reporting shall be established by Eesti Pank. Reporting instructions on annual accounts are in accordance with the EC directive on the annual accounts of credit institutions (86/635/EEC).

On the subjects of preparing instructions for reports, Eesti Pank acts in close co-operation with credit institutions. In 1997 a new kind of reporting system was implemented for the statements on loans, deposits and securities. The nucleus of the new approach was that the aggregation of data could take place not in the reporting institution, but at the central bank. The reporting form consists of sentences, where one figure is described by different identifiers: e.g., maturity, residency, currency, pledge, interest rate, economic sector of the lender, and so on. It gives as many dimensions for the processing of data as there are set identifiers. The same principle was adopted in the two latest large projects - reports on payment intermediation and off-balance sheet commitments.

Eesti Pank performs various kinds of checking procedures in relation to banking statistics data. Some are aimed at ascertaining the formal consistency of reports with the requested criteria while others verify the logical and accounting consistency within the framework of the survey. The checking and correction of errors takes place through a system of communication between Eesti Pank and the reporting institutions that parallels that of returns.

6.3. Specific monthly reporting schemes for credit institutions

The statement of the regional breakdown of loans and deposits (implemented in April 1997) was created on the initiative of banks themselves to give more detailed information supporting their marketing actions. The report gives information about the loans and deposits in different Estonian cities and counties, while also providing a breakdown by institutional sectors and making it possible to calculate the average size of the loans and deposits in question.

The payment statistics system was prepared by Eesti Pank in 1998 to support the management of currency circulation and implementation of new payment and settlement systems. At the same time the data was used in the compilation of Estonian data for the publication of the European Central Bank's document describing the payment systems of EU candidate countries (the so called "Blue Book"). During the preparation period the banks found that within the context of payment statistics they were interested in more detailed information for the strategical development of payment instruments. The report forms were amended to cover both the needs of Eesti Pank and reporting institutions and now contain very detailed information.

7.1. Definition of residency

For the purpose of compiling money and banking statistics, the definition of residence is the same as that used for balance of payments statistics and follows the IMF definition (see Appendix 6).

7.2. Definition of domestic territory

In defining domestic territory for money and banking statistics, branches (and subsidiaries) of Estonian banks abroad are regarded as non-residents, whereas branches of foreign banks located in Estonia are regarded as resident banks.

In their monthly financial statements on loans (both turnover and stock), non-performing loans/loan loss provisions and securities, credit institutions supply a breakdown by industry sector as follows:

agriculture, hunting and forestry

fishing

mining

manufacturing

energy, gas and water supply

construction

wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods

hotels and restaurants

transport, storage and communication

financial intermediation

real estate renting and business activities

public administration and defence; compulsory social security

education

The classification used for this grouping is the Classifier of Spheres of Activities of the Estonian Economy (EMTAK) based on NACE rev.1, A17. Data is cross-checked with balance sheet totals.

9. External data (transactions with non-residents) and foreign currency transactions

9.1. Cross-border holdings of non-residents

All the flows of information include details of the domiciles of counterparts, separating the data of residents from those of non-residents. The breakdown described above does not provide any details on operations with European Union countries or with third countries. However, the monthly details on credits (incl. interbank), deposits, securities and off-balance sheet items are available in every single currency.

9.2. Foreign currency breakdown in residents' holdings

On balance sheets, monthly (also ten days) statistics provide information about two groups - domestic and foreign currency. Foreign currency operations are converted into Estonian kroons at the exchange rate in force on the reference date of the returns. Further details are available in additional monthly financial reports concerning deposits, loans, non-performing loans/loan loss provisions, securities and off-balance sheet items. In these reports all amounts are broken down by individual currency.

On most financial statements submitted by credit institutions, the breakdown of assets and liabilities by terms is based on the maturity at issue. Short term matirities cover operations with a term of up to 1 year. In the case of loans, maturity is established on the basis of the term of the loan as stated in the loan agreement. The same also applies if the loan is issued in parts. In the case of securities, maturity is established according to the redemption date of the security. In the case of securities bought with the obligation to sell back, maturity is shown according to the period of possession of the security. In the case of securities held in a trading portfolio, maturity is 'on demand'.

For the purpose of prudential control, credit institutions also supply a monthly outline of their operations based on the main items of assets and liabilities, broken down according to their residual term.

In the new set of off-balance sheet commitment's statistics (implemented in December 1998) both types of maturity - residual and at issue - are available.

The different maturity bands are given in Appendix 7.

11.1. Lending and deposits interest rates

The supplementary financial statements provided by credit institutions on loans and deposits include some very exact and detailed information about interest rates. It is possible to calculate interest rates in all available groups and 'cross-groups' of customers, maturities, currencies, residencies and, in the case of loans, also industries and collaterals. The weighted average interest rates are calculated according to the turnover of the last reporting period; i.e., the previous month. In the regular publications of Eesti Pank the interest rates of loans and deposits are published separately in Estonian kroons, euros and US dollars in major maturity categories. The interest rates of EEK and euro denominated loans by the borrower's main industry groups, consumer credits and housing loans are also available. The interest rates of interbank loans and deposits granted in Estonian kroons, euros and US dollars broken down by maturity (overnight, other short-term and long-term) are published separately.

11.2. Other data collected on interest rates

Eesti Pank also collects and publishes daily data on money market interest rates from a limited number of credit institutions. These interest rates - TALIBOR (Tallinn Interbank Offered Rate) and TALIBID (Tallinn Interbank Bid Rate) - are quoted for 1 month, 3 months and 6 months terms.

12. Interest paid and received, profits and dividends

12.1. Available information from profit and loss accounts

Each quarter, credit institutions submit their profit and loss accounts to Eesti Pank. These reports contain information on the incomes that credit institutions have received and expenses they have made. The amounts of interest received and paid are broken down by residency (residents and non-residents) and by the type of instrument used. On the income side these instruments are:

loans

deposits

debt securities and fixed income securities

forwards

other

The data from the profit and loss accounts are also used by the Estonian Statistical Office to draw up the National Accounts.

Eesti Pank also collects but does not publish the annual audited accounts of credit institutions profits and losses. This data is published by the credit institutions themselves in their annual reports.

Eesti Pank publishes a wide range of monetary statistics on its internet homepage (www.bankofestonia.info). The exact schedule for the release (see Appendix 8) of different indicators of the Estonian commercial banking sector can also be found on the website at www.bankofestonia.info/pub/en/dokumendid/statistika/avaldamiskalender/. The indicators released according to the pre-set schedule can be accessed on the website at 12.00 local time on the day of their scheduled publication.

Information service of Eesti Pank:

In October 1998 Estonia completed the adoption of the Special Data Dissemination Standard (SDDS) of the IMF. Estonian metapages describing the nature of the data, quality and methodology of compilation and access by the public have been available on the IMF electronic Bulletin since January 1999 (http://dsbb.imf.org). The country page containing data can be found through the Statistical Office's of Estonia Internet homepage at www.stat.ee.

Statistical data is also included in the following publications of Eesti Pank:

the Annual Report of Eesti Pank, published in Estonian approximately 5 months and in English approximately 6 months after the end of the year. Also available on the internet homepage.

Kroon & Economy (quarterly, in Estonian and in English), available from the Publications Division of Eesti Pank on request. Also available on the internet homepage.

Monetary Developments & Policy Survey (quarterly, in Estonian and in English). Also available on the internet homepage.

Financial Stability Review (quarterly, in Estonian and in English). Also available on the internet homepage.

Information about other financial institutions is published in Monthly Bulletin of Estonian Statistics, a publication of the Statistics Estonia.

Information service of the Statistics Estonia:

14. Data processing methods

14.1. Basis of calculation

Stock figures are end-of-period figures. Flow figures are according to the designated period (usually 1 month, in profit and loss accounts they are given cumulative incomes and expenses for the 3, 6, 9 or 12 months of the most recent year).

14.2. Breaks in series

Changes in methodology and structural changes are commented on in a separate article or in the footnotes in both electronic and paper publications.

Data is preliminary when first released and is subject to revisions during the following month. The final form of the data is published in the following month in next issue of monetary statistics. All revisions are underlined.

14.4. Valuation adjustments

With regard to valuation, credit institutions may follow the legal valuation guidelines. Balance sheet items denominated in foreign currencies are reported on the balance sheets using end-of-month exchange rates. However, in all supplementary financial statements the amounts are recorded in their original currency (identified with the currency code), so that true data flow can be calculated.

Allowances for uncollectible claims are shown under a separate balance sheet item, so all the sub-items on the balance sheet are shown on a gross-basis, but the total assets reflect their net value.

Securities are recorded using their acquisition cost which consists of the purchase price plus any expenditures directly related to their acquisition. Securities are further divided into short-term and long-term financial investments depending on the aim of their possession. Short term financial instruments are marked to market on the day of balance. The profit/loss due to a revaluation is indicated on the income statement. Long-term financial investments are assessed according to their sale cost if the sale cost has constantly been lower than acquisition cost.

ESTONIAN MONEY AND BANKING STATISTICS METHODS