Form A3: Income and expenditure
INTRODUCTION
The information obtained from this form is to be used in the estimation of aggregates for
Amended
financial companies for the National Accounts. The definitions of some of the items
o/a Stats therefore differ from those usually used by accountants. It should be understood that a
notice
2001/01 degree of approximation or estimation in completing the return is entirely acceptable
within the statistical context for which the information is required. Specifically, those
data relating to Net Spread Earnings (item 5) and Fees and Commissions (item 6) are
to be completed on a ‘best endeavours’ basis (see General Notes and Definitions,
section 3).
. Form A3 may cover either the activities of the reporting institution or, if more convenient, the
activities of some or all the UK banks within the group to which the reporting institution
belongs. In the latter case, only one institution in the group should complete the return,
stating the names of those other UK banks whose accounts have been consolidated.
However, payments of interest and dividends between members of the reporting unit,
should be reported gross and not netted out
Most items on this form should be shown on an accruals basis in accordance with
generally accepted accounting principles. Discounts and premia on bills / zero coupon or
deep-discount bonds held (see items 2A and 2D overleaf) should also be accrued for,
again in accordance with generally accepted accounting principles. In the case of securities
dealt in at interest exclusive prices, interest earned for the period during which the security
was held should be deemed as having been received. However, dividends (item 1) and
non-dividend remitted earnings (part of item 7D) should be reported on a cash basis.
Items within boxes 1 to 7 on this form should exclude revaluation effects. This applies to
foreign currency revaluations, realised profits and losses (difference between the purchase
and sale price) and unrealised profits and losses (difference between the purchase and
current market price).
Amended o/a The form should relate to amounts payable and receivable during the calendar quarter or
Stats notice
2001/01 year or, if the form is currently being reported on a non standard schedule, during the
reporting institution's accounting period nearest the end of the calendar quarter or year (but
see below regarding reporting schedules).
REPORTING BASIS FOR FORMS A3 AND BP
Amended o/a Reporting banks which submit quarterly figures on these forms should do so on the basis of
Stats notice
2001/01 income and expenditure receivable / payable during the quarter in question. Each return
covers data for three months only i.e. for the quarter to end-March, June, September and
December.
January 2001 A3 / Page 1
Banks are informed whether they need to report the form on an annual or quarterly basis.
Amended
Banks which currently report on a standard calendar basis (i.e. either quarterly at end-
o/a Stats March, June, September and December or annually at end-December) may no longer
notice
2001/01 change their reporting cycle to a non-standard cycle. Banks which currently report on a
non-standard cycle are free to change to a standard calendar basis ahead of the end 2001
cut off (see Stats Notice 2001/01), but should inform the Bank of England before they do so.
Any new banks joining the reporting population are required to start completing their returns
on a standard calendar basis.
REPO TRANSACTIONS (AND SECURITY BORROWING / LENDING)
Repos should be read to encompass repos / reverse repos and security borrowing / lending when cash
collateral is involved. These definitions do not refer to the treatment of buy / sell back transactions, which
follow this section.
(i) The borrower of repoed securities should record both the original receipt of dividends or coupon
payments from the issuer and the subsequent payments of manufactured dividends / coupons to the
lender of the repoed securities under “interest/dividends received” for the underlying instrument,
analysed by issuer. If the original receipt and subsequent payment occur within the same reporting
period, the net effect on the box will be zero.
(ii) The lender of repoed securities should record receipts of manufactured dividends / coupons under
“interest and dividends received” on the respective instrument, analysed by issuer.
(iii) In cases of security for security repo deals or security lending / borrowing deals, for which no (or
non-cash) collateral is received, income from the deals should be classified as fee income only (part of
Amended
o/a Stats A3 item 6, BP item 3B). Any dividend / coupons received during the repo deal should not be included in
notice the fee income but should be manufactured back to the lender of the security concerned. This should
2001/01
be recorded by the borrower as set out above in section (i) and by the lender as set out in section (ii).
(iv) In cases of security borrowing / lending deals when cash collateral is involved, income from the
deals (the “rebate return”) should be classified as repo interest (A3 items 2C and 3C and BP items 1F
and 2F).
BUY / SELL BACK (REPO) TRANSACTIONS
Buy / sell back transactions are a method of achieving a repo without the dedicated settlements systems.
The economic rationale for transacting buy / sell backs and repos is the same. The accounting treatment
however, differs because of the minor differences in settling these trades. For the purposes of this form,
the main difference is that under a buy / sell back, there are no manufactured dividends. Where a coupon
is paid “mid-repo” (received by the stock borrower, but due to the lender), it is passed to the lender by
adjusting the price of the closing leg (under a normal repo, the system recognises that the coupon
belongs to the stock lender, and automatically manufactures a dividend to pass it back immediately). The
following procedures are specified to ensure the correct treatment of coupon payments under buy / sell
back repo trading.
A3 / Page 2 January 2001
(i) In the case of a buy / sell back repo, the borrower of securities should record any receipts of the
dividend / coupon in item 2C and ensure that it does not appear as a receipt of income on securities
held - see notes to A3 items 2C and 3C and BP items 1F and 2F.
(ii) In the case of a buy / sell back repo, the lender of the securities should record a dividend/coupon
receipt in “interest and dividends receivable” (even though it is due to be received by the borrower) if
the economic benefit passes to the lender via an adjusted repurchase price. Also the lender
should record an adjusted repo interest flow on the buy / sell back repo deal to account for the non-
receipt of the dividend/coupon - see notes to A3 items 2C and 3C and BP items 1F and 2F.
(iii) In cases of security for security repo deals or security lending / borrowing deals, for which no (or
Amended
non-cash) collateral is received, income from the deals should be classified as fee income only (part
o/a Stats
notice of A3 item 6, BP item 3B). Any dividend/coupons receivable during the repo deal should not be
2001/01
included in the fee income but should be manufactured back to the lender of the security concerned.
This should be recorded by the borrower as set out above in section (i) and by the lender as set out in
section (ii).
(iv) In cases of security borrowing / lending deals when cash collateral is involved, income
from the deals (the “rebate return”) should be classified as repo interest (A3 items 2C and 3C
and BP items 1F and 2F).
TAXATION
All amounts of income receivable and payable (items 1 to 7) by the reporting institution should be
reported on form A3 without adjustment for any associated tax liability or claim arising between the
reporting institution and tax authorities in the UK or the rest of the world.
The value of remitted earnings from subsidiaries and branches should be reported after the deduction of
their tax liabilities.
Income receivable from services on which VAT is chargeable should be reported in item 6 without
addition of VAT.
Examples of services offered by banks on which UK VAT is chargeable include finance leasing,
registration, custody, trustee and investment banking advisory services and also investment
management services. Expenditure payable (see notes to item 7) should include non-recoverable VAT.
See notes below on item 8 relating to the specific entries for tax due to / from UK tax authorities.
January 2001 A3 / Page 3
A3 item
1 Dividends received / paid on equity
Enter the value of dividends received and paid during the period (this should also include the
cash value of any scrip issues). Include all dividends received on equity, but exclude dealing
and capital profits/(losses). Figures should be reported gross of tax.
Dividends received from non-residents should be separated out under item 1A. However, there
is no separate item for dividends paid to non-residents.
2 Total interest receivable
Include under item 2 interest receivable classified by instrument. Also include any interest
received on gold deposits within item 2B (loans and advances). Within the instrument
breakdown, interest receivable from non-residents should be identified as an “of which”
category. Note that where the reporting institution participates in, or acts as a manager or
co-manager of, a loan financed by more than one institution, include only interest received on
the reporting institution‟s participation for its own account.
2A Interest receivable on money market instruments
Include here all interest receivable on money market instruments, embracing all income from
certificates of deposit, promissory notes, commercial paper and other short-term negotiable
paper. This would include interest receivable on money market instruments issued by banks
and building societies and owned by the reporting institution (BT items 23E, 23F, 23GA, 23GC,
23J & 23L) together with any interest or discount receivable on bills (BT item 26), except where
such interest relates to bills held in respect of ECGD guaranteed lending - see 2B below.
Include any interest accruing over the reporting period in respect of short-term deep-discount
and zero-coupon instruments – please also see General Notes and Definitions, item 8(b) (v).
Interest receivable on short term paper issued by non-residents should be included under item
2A1.
2B Interest receivable on loans and advances (excluding under repo agreements)
Enter under this item interest receivable on other loans and advances (including any
denominated in gold - BT item 35A), including interest debited to loan or overdrawn accounts
as well as to accounts in credit (BT item 29). Interest from balances with banks, building
Amended
o/a Stats societies and other monetary financial institutions should be included here (BT items 23D,
notice
23GB, 23H & 23K). Where banks charge interest on a net basis to a customer, this may be
1999/01
reported as such. Also include here all interest receipts, including those from bills held, in
respect of ECGD bank guaranteed scheme lending for exports and DTI special scheme lending
for shipbuilding (BT item 27 and 28). Include any subsidies received (net of any payments).
Interest receivable from non-residents, including all receipts in respect of ECGD related
lending, should be included under item 2B1.
A3 / Page 4 January 2001
2C Interest receivable on repos / reverse repos
Include receipts from security lending/borrowing only when cash collateral is involved -
other income from security lending/borrowing should be classified as fees.
This item should measure the excess receivable by the reporting institution representing the
difference between the sale price and re-purchase price of the repoed securities. In the case of
a buy-sell back repo, where the pricing of the deal takes into account the receipt of a dividend /
coupon on the repoed stock by the borrower, the income flows from the repo deal should be
adjusted as follows: The borrower of the security should record the value of the dividend /
coupon received in item 2C (repo interest receivable) and ensure that it does not appear as a
receipt of income on securities held (see items 2A and 2D). The lender of the security should
add the value of the dividend / coupon he should have received (had he not repoed out the
security on a buy-sell back repo deal) to both item 3C (repo interest payable) and to the
relevant income item (2A or 2D).
Repo interest receivable from non-residents should also be separated out under item 2C1.
2D Interest receivable on bonds and FRNs
Include all interest receivable on bonds, FRNs and other instruments included in BT item 32
(i.e. all debt instruments other than those included under item 2A above), but exclude dealing
and capital profits/(losses). Figures should be reported gross of tax. See also General Notes
and Definitions, item 8(b) (v).
Interest receivable on bonds and FRNs issued by non-residents should also be separated out
under item 2D1.
3 Total interest payable
Include under item 3 interest payable classified by instrument. Also include any interest
payable on gold deposits. Exclude any interest passed on to other participants in a syndicated
loan. For each category, interest payable to non-residents should be identified as an “of which”
category, where one exists.
3A Interest payable on money market instruments
Include here all interest payable on money market instruments issued by the reporting
institution which are included under BT items 4 and 5A, including all interest payable on
certificates of deposit, promissory notes, commercial paper and other short-term negotiable
paper issued. See also General Notes and Definitions, item 8(b) (v).
Note that there is no “of which: non resident split” for this item.
3B Interest payable on deposits (excluding under repo agreements)
Enter under this item interest payable on deposit liabilities (and any gold deposits) included
under items 2 and 3 on Form BT.
Interest payable to non-residents should also be separated out under item 3B1.
January 2001 A3 / Page 5
3C Interest payable on repos / reverse repos
Include payments resulting from security lending / borrowing only when cash collateral
is involved - other payments resulting from security lending / borrowing should be
classified as fees.
This item should include the deficit payable by the reporting institution representing the
difference between the sale price and re-purchase price of the repoed securities. In the case of
a buy-sell back repo, where the pricing of the deal takes into account the receipt of a
dividend/coupon on the repoed stock by the borrower, the income flows from the repo deal
should be adjusted as follows: The borrower of the security should record the value of the
dividend/coupon received in item 2C (repo interest receivable) and ensure that it does not
appear as a receipt of income on securities held (see items 3A and 3D). The lender of the
security should add the value of the dividend/coupon he should have received (had he not
repoed out the security on a buy-sell back repo deal) to both item 3C (repo interest paid) and to
the relevant income item (2A or 2D).
Repo interest payable to non-residents should also be separated out under item 3C1.
3D Interest payable on bonds and FRNs
Include all interest payable on bonds, FRNs and other instruments included within BT items 5B
and 5C and QX item 19CD3 (i.e. all debt instruments other than those included in item 3A
above), but exclude dealing and capital profits/(losses). Figures should be reported gross of
tax. See also General Notes and Definitions, item 8(b) (v).
Note that there is no “of which: non resident split” for this item.
5A Net spread earnings receivable from forex dealing
Include net spread earnings or losses arising from spot/forward purchases/sales of foreign
currencies, whether with UK residents or non-residents, including telegraphic and mail
transactions. The net spread earning should reflect the difference between the sale/purchase
price and the mid-market price at the time of the transaction. If possible, do not include
realised or unrealised profits or losses (revaluation profits) arising from price changes.
Brokerage or commissions earned on retail foreign exchange business should be included
under item 6, if they can be identified separately. Figures shown under this heading should be
reported in accordance with generally accepted accounting principles.
5B Net spread earnings receivable from securities dealing
Include net spread earnings or losses arising from spot/forward purchases/sales of securities,
whether with UK residents or non-residents, including telegraphic and mail transactions. The
net spread earning should reflect the difference between the sale/purchase price and the mid-
market price at the time of the transaction. If possible, do not include realised or unrealised
profits or losses (revaluation profits) arising from price changes. Brokerage or commissions
earned on retail securities trading business should be included under item 6, if they can be
A3 / Page 6 January 2001
identified separately. Figures shown under this heading should be reported in accordance with
generally accepted accounting principles. Please note that net spread earnings or losses
arising from purchases or sales of contracts in financial derivatives, should also be included
here. Any commissions earned on derivatives trading should be included under item 6, if they
can be identified separately.
6 Charges, commissions and fees receivable / payable
Banks are asked to report both payments and receipts on a gross basis; only those who are
unable to provide such a breakdown should report on a net basis.
Include, broken down by sector, charges, commissions and fees, including inter alia:
(i) Fees and commissions for new issues of securities;
(ii) Fees and commissions for investment management and other securities transactions;
(iii) Commissions for guarantees, the administration of loans on behalf of other lenders, fees
and commissions on credit and bill transactions and on commitment and utilisation
services;
(iv) Commissions and other charges in respect of payment transactions and account
administration charges;
(v) Agency fees and commissions received in respect of futures and options trading and
broking where separately identifiable; premia on options should be excluded;
(vi) Commissions received in respect of retail foreign exchange business where separately
identifiable.
7 Other income and expenses
7A Total rents receivable / payable
Include here rents receivable and payable on land and buildings, which should be reported
gross.
7B Finance charges receivable on assets leased out under finance leases / payable on assets
leased in under finance leases
Under finance charges receivable include all charges relating to assets shown under items XD,
XFAB, XFBB, XFCB, XFDB, XFEB, XFFB, XFGB, XFHC, XFJB, XFKE, XFLA on Form QX.
Broadly, this item represents total rentals receivable from finance leases less depreciation of
the net investment. Exclude unearned finance charges.
Under finance charges payable include all charges relating to all assets leased in whether for
own use or for leasing out. This item represents the difference between total rentals payable
on finance leases and the depreciation on the assets leased in. Figures should be reported
here in accordance with generally accepted accounting principles.
January 2001 A3 / Page 7
7C Capital repayments receivable / payable on assets leased out / in under finance leases
Enter here depreciation on net investment in finance leases. This item represents the
difference between total rentals receivable / payable on finance leases and finance charges
receivable / payable.
7D All other income / expenses including non-dividend remitted earnings from branches or
subsidiaries but excluding capital profits or losses
Enter here any items of income which are not covered elsewhere - including all operating
expenses; e.g. wages and salaries, other remuneration, rates, stationery, water charges,
heating and lighting, insurance and equipment maintenance. Expenditure payable should also
include any amounts of non-recoverable VAT. Any other payments not covered elsewhere
should also be reported under this heading, but exclude all "extraordinary" items (as defined in
SSAP 6), depreciation charges and provision charges.
Also include all non-dividend remitted earnings and losses from subsidiaries and
branches.
8 Tax reconciliation
Include in this box amounts that have been transferred into/out of 19CD5 during the reporting
period on account of corporation tax (or any other taxes on profits or losses of the reporting
institution).
It should be noted that this box is NOT completed on the same basis as the tax boxes on the
BP form. It is not completed on the basis of cash payments to the authorities. In addition, it
should not include tax collected on behalf of the authorities in respect of income payable to
UK residents or non residents (eg. Tax on deposit interest).
This box includes:
i) provisions made for tax
(When a provision for tax is made, its value should be transferred out of 19CD5, the internal
reserves, and into 19CD4, net accounts receivable / payable).
ii) Any additional transfers into/out of 19CD5 when the tax liability is finally determined
If the provision made was too large, an amount may be reclassified from the net accounts
payable / receivable to the internal reserves - this amount should be included as a negative
contribution to item 8. (A similar negative contribution to item 8 would be recorded if a net
refund has been received form the tax authorities, and the amount is entered directly into the
internal reserves.) If the provision was found to be too small, the excess may be funded
directly from the internal reserves - this amount should be included as a positive contribution to
item 8.
Item 8 should however exclude VAT.
9 Net income derived from items 1 to 8
Enter here the total (of all currencies) of income derived from items 1 to 8 above. This total
should eventually be included within item 19CD5 on Form QX (reserves, other internal
accounts).
A3 / Page 8 January 2001
10 Reconciliation items
This section assists the analysis of item 19CD5 on Form QX.
10A Additional changes in the net debtor/creditor accounts which affect QX19CD5
Include any additional changes in the net debtor / creditor accounts (QX19CD4) which affect
QX19CD5 but have not been covered elsewhere in the A3. This therefore excludes any
transfers due to tax that should be included within item 8.
10B Transfers between BT items 19CA / 19CB (Revaluations) and QX19CD5
Include under this item all transfers from BT items 19CA (exchange rate revaluations) and
19CB (other revaluations, including unrealised profits and losses), reflecting transfers from
revaluation accounts to profit and loss. This will include any revaluation of an institution‟s
external hedging book in financial derivatives.
10C All other profits (+ve) / losses (-ve) including e.g. realised profits on investments,
profits/losses on derivatives and write-offs affecting reserves, but excluding
general/specific provisions
Enter here all other profits and losses affecting reserves, including such items as write-offs but
excluding general and specific provisions. Include realised profits and losses on investments
(the difference between the purchase and sale price of an investment), deducting any amounts
of previously unrealised profits and losses that have been transferred to 19CD5 at a year end.
Also include depreciation of fixed assets, where such assets are not reported net of
depreciation on the balance sheet. Also include all profits / losses associated with derivatives -
including „income‟ from interest rate swaps and FRAs and premia on options.
10D Additional changes in the ‘other internal accounts and reserves’ (QX19CD5)
Include under this item all other changes in reserves and internal accounts which are included
under item 19CD5 on Form QX and not reported elsewhere above. Eg Item 10D will include
increases in share premium account, and reductions in reserves arising from scrip issues.
11 Change over period in Form QX item 19CD5
Enter here the change over the reporting period of QX item 19CD5. The total in item 9 above
together with the total of items 10A - 10D above should approximate to the change in QX item
19CD5 over the same period. For those institutions who submit Form A3 annually, item 11
should show the change in QX item 19CD5 over the year since the date of the previous A3
return.
January 2001 A3 / Page 9
M Translation of foreign currency items into sterling
Foreign currency items should be translated into sterling at the exchange rate prevailing at the
time of the receipt or payment, or at an average daily rate. Average daily rates are available
from the Bank of England - they are published in the monthly publication “Monetary and
Financial Statistics” (available on the Internet). The intention of these instructions is to make
the data reflect as closely as possible, in sterling terms, the value of the receipt or payment at
the time of the transaction. Reporters are asked to discuss their preferred method for
calculating these figures with the Bank of England if there is any risk of significant distortions
which may affect their figures. In addition, banks wishing to change their translation method
are requested to inform the Bank of England prior to any change.
(i) All reporters using the exchange rate prevailing at the time of receipt or payment
All banks that translate foreign currency items into sterling at the exchange rate prevailing at the
time of receipt or payment should enter a „1‟ in box M. This is our preferred treatment.
(ii) Quarterly reporters using average exchange rates
Banks should either translate their foreign currency income and expenditure into sterling at the
average daily rate for the whole quarter, or, if they revalue their foreign currency income and
expenditure into sterling on a monthly basis, they may translate each month‟s currency income
and expenditure using the appropriate average monthly exchange rate - the quarterly value
would then be a sum of 3 monthly figures. These banks should enter a „0‟ in box M.
(iii) Annual reporters using average exchange rates
Banks should either translate their foreign currency income and expenditure into sterling at the
average daily rate for the whole year, or, if they revalue their foreign currency income and
expenditure into sterling on a monthly (or quarterly) basis, they may translate each month‟s (or
quarter‟s) currency income and expenditure using the appropriate average monthly (or
quarterly) exchange rate - the annual value would then be a sum of 12 monthly (or 4 quarterly)
figures. These banks should enter a „0‟ in box M.
A3 / Page 10 January 2001
FORM A3 STRUCTURE
This diagram assists in the understanding of Form A3 and shows the association between this
form and Form QX.
1 Dividends received
minus
1 Dividends paid
plus
2 Sum of item 2 (total interest receivable)
minus
3 Sum of item 3 (total interest payable)
plus
5 Sum of 5 (net spread earnings receivable from forex /
securities dealing)
plus
6 Charges, commissions and fees receivable
minus
6 Charges, commissions and fees payable
plus
7 Other income and expenses receivable
minus
7 Other income and expenses payable
minus
8 Tax reconciliation (reduction in 19CD5)
=
XFKBG Where the analysis for items XFKBD to XFKBF cannot be
= identified, all repayments of principal should be included here.
9 NET INCOME DERIVED FROM ITEMS 1 -8
plus
XFKBG Where the analysis for items XFKBD to XFKBF cannot be
= identified, all repayments of principal should be included here.
10 ALL ITEMS IN 10A - 10D
Approximately Equals
XFKBG Where the analysis for items XFKBD to XFKBF cannot be
= identified, all repayments of principal should be included here.
11 Change over period in Form QX item 19CD5
XFKBG Where the analysis for items XFKBD to XFKBF cannot be
= identified, all repayments of principal should be included here.
January 2001 A3 / Page 11