In order to close the gaps in the representation of unlisted equity (unlisted shares, ESA instrument F.512, and other equity, ESA instrument F.519) in the financial accounts, the stocks of issued unlisted equity are recalculated on the basis of individual annual financial statements. Specifically, the liabilities of unlisted equity instruments of non-financial corporations and other financial intermediaries are derived from the individual companies’ equity capital.

As part of the benchmark revision of the financial accounts in September 2024, the Bundesbank undertook a fundamental revision of how it calculates unlisted equity in the financial accounts. The starting point for the new method is the annual individual financial statements according to the German Commercial Code (Handelsgesetzbuch or HGB). As recommended by the ESA, issuance of unlisted shares (ESA instrument F.512) is calculated on the basis of the equity position on the balance sheets of unlisted stock corporations (AGs). In the same way, issuance of other equity (ESA instrument F.519) is calculated on the basis of the equity position on the balance sheets of private limited companies (GmbHs), limited partnerships (KGs), general partnerships (OHGs) and “GmbH & Co KGs”. Due to insufficient information, no estimate is made of a (theoretical) market value of unlisted equity in the portfolio, so that the equity position is valued at book value as specified in the issuer’s individual financial statements.

Issued unlisted equity is revised mainly for the following sectors: non-financial corporations (S.11), other financial intermediaries (S.125), financial auxiliaries (S.126) and holdings (S.127). For the other institutional sectors, i.e. deposit-taking corporations (S.122), insurance corporations (S.128), pension funds (S.129), general government (S.13), non-profit institutions serving households (S.15) and the rest of the world (S.2), there are adequate primary statistics[1] that record unlisted equity; no use therefore needs to be made of the annual individual financial statements in these cases. The issuing companies are mapped to sectors by linking them to the ESCB’s repository of master data, RIAD (Register of Institutions and Affiliates Data). For instrument allocation, companies are further linked to the Bundesbank’s equity issuance statistics in order to distinguish between listed and unlisted shares. 

Available information on the holder sectors is completed using a shareholder analysis. The Bundesbank’s primary statistics show the extent to which some sectors hold unlisted shares and other equity. The sectors for which data from primary statistics are available on the assets side are deposit-taking corporations (S.122), insurance corporations (S.128), pension funds (S.129), general government (S.13) and the rest of the world (S.2), as well as the Deutsche Bundesbank (S.121). For the other sectors, a shareholder analysis was carried out, identifying the shareholders for a sample of companies and breaking them down by sector. This information is necessary in order to fully reflect the debtor-creditor relationships in the financial accounts.

Due to the limited availability of balance sheet data, the new computation is carried out for reference periods from 2016 onwards. For this reason, a statistical break can be observed in the financial accounts time series in the first quarter of 2016. As annual individual financial statements are only available annually, the data are also subjected to temporal disaggregation. 

In addition to holdings, financial accounts include transactions, valuation effects and other volume changes. For example, “other volume changes” are changes resulting from the reclassification of an enterprise’s institutional sector. Such changes are recorded individually. Transactions and valuation gains are determined by decomposing equity into its components (subscribed capital, capital reserves, retained earnings, profit carryforwards and net income for the year/net retained profits). Such changes are recorded individually.

Overall, the recalculation shows that non-financial corporations, in particular, issue a significantly larger volume of other equity than previously captured in the financial accounts. At the current end, this sector’s liabilities in terms of other equity amounts to just over €3 trillion. By contrast, unlisted shares are, as before, a less significant instrument. The relative importance of debt instruments on the liabilities side of non-financial corporations also shift as a result of the new method. Other equity accounted for 31% of total liabilities in the second quarter of 2024. Under the previously used method, their significance was “only” 16%. Loans lose relative importance as a financing instrument owing to the recalculation.

The largest shareholders of non-financial corporations’ unlisted shares and other equity are other non-financial corporations. The new computation method leads to considerable growth on the asset side of the S.11 sector: at the current end, by almost €1.3 trillion compared with the previous method. Households’ financial assets at the current end are close to €700 billion higher than before. Other financial intermediaries (S.125-7) are also experiencing a significant balance sheet extension.

Footnote:

1. Primary statistics comprise of data collected by the Deutsche Bundesbank specifically for statistical purposes. Financial accounts use primary statistics as sources and are a secondary statistic.