Revision of the financial accounts

The financial accounts data for Germany announced in this press release are published for the first time pursuant to the provisions of the European System of Accounts 2010 (ESA 2010). This methodological framework replaced the previous ESA 1995 on 1 September 2014, and since then has constituted the binding basis for all relevant statistics in the European Union.

According to the new provisions, the previous financial accounts data are supplemented by information regarding the sectors vis-à-vis which a given sector has claims and liabilities (who-to-whom relationships). Furthermore, previously aggregated sectors and instruments are recorded separately under the new framework. However, ESA 2010 has also led to changes in the definitions of sectors and instruments. Consequently, the data published pursuant to ESA 2010 are not directly comparable with ESA 1995 data. To avoid limitations concerning the use of the data and ensure consistency with the other national accounts data, the new provisions have been applied retroactively back to 1999.

Households rely on liquid and low-risk assets: bank deposits and claims on insurance corporations increase

The changeover to ESA 2010 has resulted in households – which had previously always been shown together with non-profit institutions serving households (trade unions, churches, etc) – being recorded separately for the first time. The results presented below comprise data on households excluding non-profit institutions serving households.

In the second quarter of 2014, the transaction-related acquisition of financial assets by households totalled around €36 billion, and was thus roughly on a par with the same quarter of the previous year. At just over €19 billion, a large part of the inflows was once again attributable to bank deposits, with transferable deposits (including currency) in particular recording inflows of just over €23 billion, whereas time deposits and savings deposits (including savings certificates) decreased by €4 billion on balance. Households’ preference for liquid forms of investment – a phenomenon which has been observed for a long time in the low-interest-rate environment – thus continued. Moreover, claims on insurance corporations and pension funds, which went up by just over €18 billion, were also a significant factor in the acquisition of financial ­assets. The continued preference for this form of investment, which is typically regarded as low risk, indicates – together with the significance of bank deposits in the acquisition of financial assets – households’ ongoing high level of risk aversion.

This is reinforced by households’ continued reluctance to invest in the capital markets, with activity up only slightly. In particular, purchases of investment fund shares amounted to just under €7 billion (+€5 billion in the first quarter of 2014), with relatively large-scale investment in mixed funds and open-end real estate funds. At just under €4 billion, direct share purchases were on a par with the previous quarter, with primarily shares in domestic enterprises being acquired, whereas in the previous quarter households had still mainly purchased foreign shares. Debt securities worth €2.5 billion were sold on balance, which was slightly more than previously (-€2 billion). Households above all disposed of debt securities issued by German corporations; German sovereign bonds were also sold, but on a considerably smaller scale.

The transaction-related increase in financial assets of around €36 billion was accompanied by valuation gains, which, at €21 billion, were higher than in the very weak previous quarter (+€7 billion). These valuation gains were primarily attributable to shares and investment fund shares. Overall, households’ financial assets thus rose by €57 billion to €4,976 billion at the end of the second quarter of 2014.

Households’ external financing in the period under review was higher than in the first quarter of the year, a period in which households typically have a cautious attitude towards borrowing. On balance, loans (including other accounts payable) totalling just under €6 billion were taken up. Against the backdrop of the continued dynamic growth in the real estate market, these were mainly loans for house purchase. Domestic banks were the sole lenders whereas loans from insurers and other financial intermediaries decreased slightly. Households’ aggregate liabilities thus rose to a total of €1,571 billion. In combination with the rise in financial assets during the period under review, this resulted in net financial assets increasing by €51 billion to €3,405 billion. The debt ratio – defined as total liabilities as a percentage of annualised gross domestic product – shrank by 0.1 percentage point to 55.0% at the end of the quarter.

Non-financial corporations: marked decline in financial assets and moderate rise in liabilities

The changeover to ESA 2010 resulted in the non-financial corporation sector being redefined. Thus inter alia enterprises whose sole task is to manage the assets of their subsidiaries (so-called captive financial ­institutions and money lenders) are now recorded in the financial sector.

In the second quarter of 2014, the acquisition of financial assets by non-financial corporations remained at the level of the previous quarter, with outflows of around €15 billion. On the one hand, there was a €3 billion reduction in bank deposits (including currency), and loans (including intra-group loans and loans to captive financial institutions) decreased by €2 billion. On the other hand, in particular equity (excluding investment fund shares) recorded inflows of around €5 billion, not least due to enterprises’ strong investment activity abroad, and holdings of debt securities were topped up by just under €0.5 billion. 

At €25 billion, non-financial corporations’ external financing during the period under review was roughly on a par with the previous quarter. In addition to sovereign loans and loans from abroad (€16 billion), this was also attributable to enterprises’ borrowing from domestic banks, which, at €8 billion, was virtually unchanged. By contrast, the figure for enterprises’ borrowing from domestic non-banks (excluding general government) was negative (-€1 billion). Furthermore, at just under €3 billion, equity financing once again made a positive contribution to external financing. However, holdings of debt securities fell comparatively sharply (by around €6 billion), thereby breaking the trend observed in previous quarters of a greater level of debt financing via the capital market. Other accounts payable, of which primarily trade credits and advances, once again decreased on balance by just over €1 billion.

Overall, non-financial corporations’ net financial assets thus fell by €59 billion in total and came to -€1,763 billion in the second quarter of 2014. In light of the rise in debt, the debt ratio – defined as the sum of issued debt securities, loans and company pension commitments as a percentage of annualised gross domestic product – increased to 61.8% (first quarter of 2014: 61.5%).

Further information on the revision of the financial accounts can be found in the Deutsche Bundesbank’s October 2014 Monthly Report.