The bank accounting is the accounting for banks, more precisely for all credit institutions . It differs significantly from the accounting of non-banks , which do not conduct typical banking business. As part of the bank accounting , a balance sheet is drawn up in which credit institutions must observe specific accounting standards. The annual financial statements of a credit institution include the balance sheet, the profit and loss account and the notes .
In Germany, non-banks and credit institutions are generally subject to the accounting regulations of the Commercial Code and - in the case of the legal form of a stock corporation or partnership limited by shares - also to the Stock Corporation Act . Internationally, the accounting standards of the International Accounting Standards Board (IASB) apply to all companies , provided that the accounting companies act as securities issuers on an organized capital market . According to the EU's IAS regulation of July 2002, they are obliged to apply the International Financial Reporting Standards (IFRS) to their consolidated financial statements since 2005 . The International Financial Reporting Standard 7 in particular applies to credit institutions .
Schematic example of a bank balance sheet
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Differences from non-bank accounting
In addition to these general accounting regulations, credit institutions must also observe the provisions of Sections 340 ff. HGB and the Financial Institutions Accounting Ordinance (RechKredV) that apply specifically to them . This results in formal and material differences from accounting for non-banks.
Sections 340 to 340o of the German Commercial Code (HGB) contain supplementary regulations for credit institutions and financial services institutions that take into account the particularities of the banking industry . HGB regulates which provisions of the HGB also apply to the banking industry and which do not (Section 340a (2) HGB). HGB deals with repurchase agreements if they fall under the legal definition codified here . HGB contains provisions on the profit and loss account and the notes, according to HGB the remaining term is decisive for the the deadlines, HGB deals with the valuation of assets , HGB deals with the provision reserves, HGB deals with the "Fund for general banking risks ”, HGB contains regulations on currency conversion , HGB regulates the size-independent obligation to prepare consolidated financial statements , HGB regulates the disclosure obligations , the rest for violations.
The Financial Institutions Accounting Ordinance (RechKredV) provides for a different order and a more precise deadline structure than for non-banks. Bank balance sheets follow the classification scheme prescribed in liquidity on the assets side , so that assets begin with the most liquid balance sheet items such as cash reserves and cash on hand . While in the case of non-banks, No. 1a HGB only differentiates between short and long-term terms for receivables and liabilities , these balance sheet items are subject to more precise deadlines according to Paragraph 2 RechKredV (<3 months,> 3 to 1 year,> 1 to 5 years and> 5 years). According to § 2 RechKredV, in deviation from German Commercial Code (HGB ), credit institutions must prepare the profit and loss statement using special forms, whereby the account or graduated form is permissible. The reason for this is the characteristic that banks do not generate revenue like non-banks, but predominantly interest income ( RechKredV), which must be compared with the interest expenses ( RechKredV). According to RechKredV, additional explanations must be given in the appendix, RechKredV requires additional mandatory information .RechKredV and are based on the principle of
Liquidity and cash reserve
The balance sheet provides information on how quickly and with what financial losses assets can be liquidated if necessary. This is known as static liquidity . As a special feature compared to the balance sheets of industrial companies, in which only the item cash is available as a cash reserve, central bank balances such as the minimum reserve balance are also accounted for as cash reserves at banks , even if these are not available at normal times.
Accounting for equity
Equity consists in banks, first of subscribed capital , capital reserves , retained earnings and the balance sheet profit or the net loss . This core Tier addition, banking supervisory yet certain capital instruments under Art. 51 law Kapitaladäquanzverordnung (abbreviation CRR) and supplementary capital pursuant to Art. 62 CRR recognized as own funds.
Provisional reserves and cross-compensation
According to Section 340f (1) of the German Commercial Code (HGB), credit institutions may value claims from the lending business , bonds and shares (which are neither part of the financial assets nor the trading book , i.e. only affect the banking book ) at a lower book value than the book value resulting from the strict lower of cost or market principle , provided this reasonable commercial judgment is permissible. The provision reserves must not exceed 4% of these balance sheet items. Further details do not need to be made in the annual financial statements (Section 340f (4) HGB). This results in an improvement in the eligible capital because the provision reserve is recognized as supplementary capital (Art. 63 (1) CRR gives the member states an opening clause for “other items”).
Income and expenses from other securities and receivables are all income and expenses that arise in connection with the securities portfolio of the liquidity reserve and the lending business and do not represent interest income or current income. Here is a cross-compensation instead. If cross-compensation is used, it cannot be seen in the annual financial statements whether and to what extent provision reserves have been created or dissolved.
This is different from IAS . Here, risk provisioning relates exclusively to the valuation result in the lending business. As a net figure, it contains the balance of depreciation , value adjustments and provisions for latent and discernible risks and the income from the reversal of these items. There is no possibility of creating reserves , either for loans or for securities.
Accounting for financial assets
A bond is accounted for either under bonds and other fixed income securities or under loans and advances to customers .
Depending on whether a bank issues bonds, they are accounted for differently. If a bank buys bonds, they are listed under the above Item accounted for. However, if a bank issues bonds itself, these must be listed in liabilities under liabilities to customers .
Positions below the balance line
This includes business transactions that cannot be accounted for but which, after the next balance sheet date , can trigger a liability , a possible obligation ( credit risk ), a loss or a profit for the financial institution preparing the balance sheet . A claim is likely; As soon as it becomes specific, a provision must be made for impending losses from pending transactions . The position is on the liabilities side of the balance sheet.
They can be further subdivided into:
- Pending transactions : For example, derivatives do not have a market value on the day they are concluded, so that accounting is not possible. As soon as they develop a negative market value after the conclusion of the transaction, provisions must be made for these impending losses in accordance with (1) of the German Commercial Code. Due to the realization principle, positive market values are always disregarded ( Paragraph 1, No. 4, Clause 2 HGB).
- Contingent liabilities : These are liability obligations that the credit institution may have under guarantee credits ( sureties , guarantees or other warranties ).
- Other commitments: These include irrevocable loan commitments , placement and takeover commitments .
In Appendix further information is required.
Special evaluation regulations
The following valuation rules apply to banks:
- credit institutions to German Commercial Code for
- to HGB general valuation regulations
Profit and Loss Account
The account form of the income statement results from HGB and replaces the provisions of HGB - applicable to non-banks - further details are regulated by § ff. RechKredV . The P&L is structured as follows for credit institutions:
The P&L can be further characterized using important items. A distinction is made between net interest income, trading income and income from financial investments.
Income and expense components for other securities
- Lending business valuation result
- Result from securities in the liquidity reserve
- Netting option
The financial investment result includes valuation and disposal results in connection with financial investments, i. H. Participations, shares in affiliated companies and securities treated as fixed assets.
An increase in the interest margin does not necessarily lead to an increase in net interest income. An increase in the interest margin can be attributed in particular to a falling balance sheet total with constant net interest income.
An increase in net interest income does not necessarily lead to an increase in the interest margin. If net interest income and total assets change in the same ratio, the interest margin remains constant.
The net interest income is an absolute figure, whereas the interest margin is a percentage figure.
- example 1
- Net interest income 10, total assets 100, interest margin 0.1
- The interest margin increases from 0.1 to 0.2 with constant net interest income and a decrease in total assets to 50.
- Net interest income 10, total assets 50, interest margin 0.2
- Example 2
- Net interest income 10, total assets 100, interest margin 0.1
- The net interest income increases from 10 to 20 while the balance sheet total doubles to 200. The interest margin remains constant at 0.1.
- Net interest income 20, total assets 200, interest margin 0.1
Interest income account
The interest business is the main part of the banking business. For this reason, in addition to the balance sheet and income statement, an interest income statement is / was submitted to the Bundesbank . For example, a mortgage loan with a volume of 60,000 euros and a share of 30% of the balance sheet total has an interest rate of 5,400 euros at an interest rate of 9%.
In the interest income account, both the interest rate and the volume are broken down according to original maturities as well as customer groups and products.
Calculation of annual net interest income : interest income - interest expenses.
These are descriptive key figures that do not provide any indication of which projects are useful for achieving the management goal. The reasons for different average values for these key figures can be based on differences in:
- Interest phases at the time of the deal
- Creditworthiness requirements
- Handling fees
- Sales strength of employees
Information functions of bank accounting
Accounting information available prior to the decision enhances these:
- A bank's depositor needs information about the security of their investment
- Equity providers depend on information about future corporate development. You bear the entrepreneurial risk.
Information on the extent to which management has safeguarded the interests of the investors - this is about the consequences of decisions that have already been made - enables bank management to monitor the following principal-agent relationships :
- Depositor versus bank management
- Management versus shareholders.
- Regulation (EC) No. 1606/2002 of July 19, 2002 on international accounting standards, ABl. EG No. L 243 p. 1
- Martin Jonas, The formation of valuation units in the annual financial statements under commercial law , 2011, p. 58