Inclusion of systemic investment firms in the credit institution perimeter

Chapters 4 and 8. Inclusion of systemic investment firms in the credit institution perimeter

Since 26 July 2021, investment firms are subject to a new European regulatory framework which draws a distinction between different types of investment firms, establishing that the larger, systemic ones be considered credit institutions. This is because these firms, which provide key services on the markets and in the investment banking sector, are exposed to credit and market risk similarly to credit institutions. In consequence, since that date, the European Central Bank (ECB) has assumed supervision of investment firms that obtain authorisation as credit institutions and meet the significance criteria. Importantly, although classed as credit institutions, systemic investment firms do not belong to the money-creating sector (i.e. they are not Monetary Financial Institutions (MFIs)).

The inclusion of systemic investment funds in the credit institution perimeter in Spain affects Chapter 4 (“Credit institutions and specialised lending institutions”) and Chapter 8 (“Other Monetary Financial Institutions”) of the Statistical Bulletin, although so far the impact is relatively minor, limited to branches of foreign investment firms operating in Spain. The main changes for each of these chapters are outlined below.

Chapter 4. Credit institutions and specialised lending institutions

Investment firms, like all other credit institutions, report supervisory returns. The counterpoint is that they are no longer included under “Other resident sectors”, but under the “Credit system” aggregate.

These changes affect the following Chapter 4 tables:

• All the credit institution tables in sections A) “Aggregated balance sheets (data from supervisory returns)” and B) “Breakdown of lending and deposits of credit institutions and specialised lending institutions”. From the September 2022 observation date, all these tables will include the data on systemic investment firms.
• Section D) “Supplementary tables”. The change will affect Table 4.45, from the September 2022 observation date, and Table 4.46, from the December 2022 observation date.

Chapter 8. Other Monetary Financial Institutions

As indicated above, although they are not MFIs, investment firms belong within the credit institution perimeter and, therefore, are obliged to meet the minimum reserve requirements. Accordingly, from the September 2022 observation date, the data on credit institutions’ minimum reserves in Chapter 8 (Tables 8.C and 8.35) will include systemic investment firms, in addition to the institutions that appear in Table 8.A, column b.

From an institutional sectorisation standpoint in accordance with the European System of National and Regional Accounts (ESA 2010), these investment firms, in view of their principal functions, continue to belong to “Other financial intermediaries, except insurance corporations and pension funds” (S.125). Information on the systemic investment firms that make up this segment can be found on the Banco de España’s Sectorisation of the Spanish economy Sectorisation of the Spanish economy app.