STATISTICS FOR INTERNATIONAL TRADE

IN BANKING SERVICES: REQUIREMENTS,

AVAILABILITY AND PROSPECTS

No. 194
June 2009
 STATISTICS FOR INTERNATIONAL TRADE
IN BANKING SERVICES: REQUIREMENTS,
AVAILABILITY AND PROSPECTS

Andrew Cornford

No. 194
June 2009

Acknowledgement: The author is grateful for comments from an anonymous referee. The
views expressed and remaining errors are the author's responsibility.

UNCTAD/OSG/DP/2009/2
ii

The opinions expressed in this paper are those of the author and are not to be taken as the official views
of the UNCTAD Secretariat or its Member States. The designations and terminology employed are also
those of the author.

UNCTAD Discussion Papers are read anonymously by at least one referee, whose comments are taken
into account before publication.

Comments on this paper are invited and may be addressed to the author, c/o the Publications Assistant,
Macroeconomic and Development Policies Branch (MDPB), Division on Globalization and
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New Discussion Papers are available on the UNCTAD website at http://www.unctad.org.

JEL classification: F13, F20, F36, G15

 iii

Contents

Page

Abbreviations ......................................................................................................................... v
Abstract ......................................................................................................................... 1
A. URUGUAY ROUND AND THE GATS..................................................................... 2
B. REQUIREMENTS FOR STATISTICAL DATA ..................................................... 3
C. VOORBURG GROUP................................................................................................. 6
D. INTERAGENCY TASK FORCE ON STATISTICS OF
INTERNATIONAL TRADE IN SERVICES ............................................................ 7
E. EXISTING DATA ........................................................................................................ 8
1. Cross-border trade.................................................................................................. 9
2. Natural persons ...................................................................................................... 9
3. Bank lending ........................................................................................................ 10
4. Financial FDI/M&A............................................................................................. 10
5. Aggregate indicators ............................................................................................ 10
6. Foreign bank presence ......................................................................................... 11
7. Bank accounts ...................................................................................................... 12
8. Trading................................................................................................................. 13
F. POLICY SUGGESTIONS......................................................................................... 15
REFERENCES ................................................................................................................... 16

ANNEX 1: Income from selected activities of Jordanian banks ...................................... 17

ANNEX 2: Selected activity classifications for financial services ................................... 21
 v

Abbreviations

BIS Bank for International Settlements, Basel, Switzerland

CEC Commission of the European Communities
CPC Central Product Classification
EBOPS Extended Balance of Payments Services Classification
EC European Commission
EU European Union
FATS Foreign Affiliates Trade Statistics
FDI foreign direct investment
GATS General Agreement on Trade in Services
GATT General Agreement on Tariffs and Trade
GDP gross national product
GNS group on negotiations on services
ICFA categories for foreign affiliates
ISIC international standard industrial classification
IMF International Monetary Fund
M&A merger and acquisition
NAFTA North American Free Trade Agreement
OECD Organisation for Economic Co-operation and Development
OTC over the counter derivatives
SNA System of National Accounts
TRIPS trade-related aspects of intellectual property rights (also a WTO Agreement)
WTO World Trade Organization
UN United Nations
UNCTAD United Nations Conference on Trade and Development
UNSC United Nations Statistical Commission
UNSO United Nations Statistics Office
WB World Bank
 STATISTICS FOR INTERNATIONAL TRADE
IN BANKING SERVICES: REQUIREMENTS,
AVAILABILITY AND PROSPECTS
Andrew Cornford
Observatoire de la Finance

Chasing a black cat in a dark room, blindfolded.

Raghavan, 2002

Abstract

This paper addresses the availability of statistical data for international trade in banking
services. Such data are required for WTO negotiations and work on other aspects of the
General Agreement on Trade in Services (GATS). Assessment exercises for trade in
banking services, valuation of offers and commitments in negotiations, the proposed
extension of GATS rules to cover emergency safeguard measures and subsidies, and
decisions on compensation in dispute settlement for services under the WTO agreement
are all currently handicapped by the lack of pertinent data. However, international
initiatives directed at the development of statistics for international trade in services
have so far failed to fill this gap.

Following a discussion of areas of work for which data on international trade in banking
services are required and of the outcome so far of international initiatives directed at the
development of statistics for international trade in services, the availability of statistics
relevant to the different GATS Modes of Supply is reviewed. These statistics include
cross-border trade in financial services as classified in IMF balance-of-payments
statistics, supply through the temporary presence of natural persons, local lending by
international banks; FDI and cross-border mergers and acquisitions (M&A) in financial
services, financial output and other indicators of aggregate financial activity in national
accounts and FATS statistics, and numbers and assets of foreign banks in selected
countries.

None of the currently available statistics under these headings provides a satisfactory
measure of trade in banking services under Mode of Delivery 1 of the GATS nor one
corresponding to such trade under Mode of Supply 3. The remainder of the paper focuses
on two other more promising categories of information, namely the income statements of
banks, which depend on data already generated by private-sector entities and data on
trading in financial markets. The paper shows how information in banks’ income
statements can be approximately matched to the activities specified in the definition of
financial services in the Annex on Financial Services of the GATS, and exemplifies the
potential of this information with recent income statements of Jordanian banks. An
advantage of these income statements (as well as of the trading data) is that the
measurement would depend on pre-existing work by banks and other financial systems
themselves.
2

A. URUGUAY ROUND AND THE GATS

The Ministerial Declaration of Punta del Este which launched negotiations on services as part
of the Uruguay Round of Multilateral Trade Negotiations stated that their objective would be
“to establish a multilateral framework of principles and rules for trade in services...with a
view to expansion of such trade under conditions of transparency and progressive
liberalization and as a means of promoting economic growth of all trading partners and the
development of developing countries”. The availability of pertinent statistical data would
normally be considered necessary for meeting the requirement of transparency and assessing
the contribution of this framework of rules and principles to the objectives of economic
growth and development. In the Group on Negotiations on Services (GNS) after the Punta del
Este meeting, there was indeed widespread agreement that the availability of data and
statistics was a prerequisite of meaningful negotiations. Further consideration of the subject
increased awareness of how unsatisfactory existing data and statistics were. Initially,
however, concern over this issue was overshadowed by the objective of drafting a framework
agreement for international trade in services. Differences between those (principally
industrial) countries which viewed improvements of statistics as a long-term project, on the
one hand, and those countries which believed that such statistics were an integral part of the
assessment of the balance of advantage in negotiations as to market opening, on the other,
became more important as the focus shifted from the framework to bargaining over countries’
demands and offers.

In the event the absence of adequate statistical data did not prevent completion of the
negotiations – although this absence was raised periodically by different countries as an
argument in support of negotiating positions. Commitments to liberalization were eventually
undertaken often with at best a very rough idea of their likely consequences. Indeed, in
financial services, one may doubt that the outcome of the negotiations would have been
acceptable if a large part of these commitments had not simply consisted of the binding of
existing regulations in the GATS – and thus of mostly limited changes in existing regimes –
rather than of additional liberalization.

Article XIX.3 of the GATS, which covers future negotiations, includes the following
requirements which cannot be properly met in the absence of adequate statistical data: “For
each round, negotiating guidelines and procedures shall be established. For the purposes of
establishing such guidelines, the Council for Trade in Services shall carry out an assessment
of trade in services in overall terms and on a sectoral basis with reference to the objectives of
this Agreement”. However, such assessment so far as part of the Doha round has been largely
limited to descriptive presentations of recent developments in countries’ financial sectors and
of liberalization undertaken. These have not been closely linked to the concepts and
categories of the GATS and its Annex on Financial Services, and the exercise has been
limited and piecemeal rather than comprehensive.

The rest of this paper focuses principally on the position regarding statistics for international
trade in banking services, i.e. activities (v) – (xvi), banking and other financial services
1
(excluding insurance) of the Annex. The approaches discussed in this paper could be applied
to insurance but explicit inclusion of the sector would have required a significant extension of
the discussion to a distinct set of institutions and transactions.

1
The classification of these activities together with the corresponding classification of insurance
activities is given in detail in Annex 2 of this paper, where it can be compared with the classifications
of financial services in IMF balance-of-payments statistics and that proposed for FATS statistics
(described in section D below).
 3

B. REQUIREMENTS FOR STATISTICAL DATA

Statistical data are important for the following subjects under the headings of negotiations on
trade in services and related work:

• Valuation of offers and commitments in negotiations on banking services. Such

valuation would facilitate comparison not only of offers and commitments applying to
the banking sector itself but also that of offers and commitments for banking with
those for other services as well as with other subjects of WTO negotiations such as
goods trade and trade-related intellectual property rights. Cross-sectoral inter-sectoral
bargaining can be part of WTO negotiations.
• Assessment of trade in banking services. Assessments covering not only the
expansion of such trade but also its contribution to economic growth and
development would not only meet the requirements of the GATS Article XIX.3 but
could also contribute significantly to more general understanding of cross-border
transactions in banking.
• Emergency safeguard measures. Article X of the GATS provides for future
multilateral negotiations of emergency safeguard measures based on the principle of
non-discrimination. The existing GATS does not contain provisions for such
measures in the case of particular services analogous to those of GATT Article XIX
and of the WTO Agreement on Safeguards. Rules for emergency safeguard measures
would require supporting statistical data concerning the scale of cross-border
transactions or the commercial presence of foreign suppliers which could trigger the
measures (see box 1).
• Subsidies. Article XV of the GATS provides for future negotiations to develop
multilateral disciplines to avoid trade-distortive effects of subsidies on trade in
services and to address the question of appropriate countervailing measures by
countries affected. The importance of this subject in the future work of the WTO has
been substantially increased by measures undertaken in response to the current
financial turmoil to protect national financial sectors. The existing GATS does not
contain provisions for subsidies analogous to those of GATT Article XVI and the
Agreement on Subsidies and Countervailing Measures. Development of multilateral
disciplines is likely to involve more difficult methodological problems than in the
case of safeguards. But here too, statistical data on the value of the trade in services
involved, can be expected to be required (see box 1).2

2
There is no provision in the GATS for rules on the dumping of services analogous to those of GATT
Article VI. However, the issue of the dumping of financial services was raised during the negotiation of
the GATS in the Uruguay Round. This was in response to the alleged practices of certain Japanese
investment firms taking the form of the use of monopoly profits earned in the protected subsector of
retail selling of financial instruments for the purpose of cross-subsidizing the prices of their services in
foreign markets. Even if dumping has not been attributed a heading of its own in the GATS, its
eventual inclusion amongst subjects to be covered by the restrictive business practices of Article IX is
possible. Such inclusion would result in further requirements for statistics as well as the need to
confront some difficult conceptual issues regarding the definition of prices for financial services which
do not cover costs.
4

Box 1
SAFEGUARDS AND SUBSIDIES

In regimes for international trade safeguards are temporary measures designed to provide relief
to an industry threatened with serious injury by increases in imports. According to Article X of
the GATS, “there shall be negotiations on the question of emergency safeguard measures
based on the principle of non-discrimination” (whose results were supposed to enter into force
not later than three years after the WTO agreement itself).
Unlike safeguards, subsidies are considered as measures which can be in violation of accepted
codes of conduct for international trade. Certain domestic as well as export subsidies are
regarded as having trade-distortive effects since, like tariffs, such subsidies are capable of
supporting domestic producers in competition with imports. Arriving at acceptable definitions
of trade-distortive subsidies for the purpose of trade rules has proved a difficult task in view of
the large number of different types of economic support which governments provide and of
differences in countries’ attitudes towards government intervention in the economy. Such
definitions together with procedures for dealing with subsidies are part of the Agreement on
Subsidies and Countervailing Measures reached during the Uruguay Round, which
complements and expands Article XVI of the original GATT. On this subject too, under
Article XV of the GATS, member countries of the WTO are to enter into negotiations in order
to develop disciplines designed to avoid the distortive effects on international trade in services
of subsidies as well as rules for procedures to countervail subsidies. Explicit reference is made
in Article XV to the role of subsidies in development programmes and to the need for
flexibility.
In the case of safeguards for banking services, one would expect Mode of Supply 3 to be the
principal source of concern, although Mode of Supply 1 could also be important for countries
highly open to cross-border financial transactions. For Mode of Supply 3, the problem of the
appropriate statistics for use by a country making a case for the application of safeguard
measures appears more straightforward than for the other subjects listed in section B, since the
share of the assets or capital of a country’s banking sector naturally suggests itself. The rules
of the North American Free Trade Agreement (NAFTA) of 1992, are of interest in this context,
since they specify the pace at which banks (and other financial firms) from Canada and United
States can establish themselves in Mexico in terms of shares of the total capital of the Mexican
subsector. For example, during four years following an initial transition period, Mexico had the
right to restrict the aggregate share of foreign financial affiliates in the total capital of the
country’s commercial banks to 25 per cent for a period of three years.
Establishing rules for subsidies is likely to prove more difficult than for safeguards in the light
of the explicit acknowledgement in GATS Article XV that such rules should be flexible, and of
the limitations on national treatment in the case of certain subsidies (in other words subsidies
which discriminate against foreign suppliers) already included in some countries’ negotiated
schedules of commitments for banking. Prior to an agreement by WTO member countries on
rules, it is difficult to foresee what data will be required for cases involving subsidies.

• Compensation and suspension of concessions. Under the WTO agreement,

Understanding on Rules and Procedures Governing the Settlement of Disputes, the
level of the suspension of concessions or other obligations authorized by the Dispute
Settlement Body is to be equivalent to the benefits whose “nullification and
impairment” are the cause of the dispute. Decisions on such compensation involving
banking services would require statistical measures, as would the compensation
required from a country taking safeguard actions (see box 2).

In the absence of rules under Articles X and XV of the GATS and of relevant case law for
banking services - that is to say in the situation now prevailing - procedures regarding
emergency safeguard measures or subsidies would presumably be based on data submitted ad
hoc by the firms of the country claiming the need for action. The data themselves could be a
 5

source of disputes unless they met standards acceptable to different countries. So reliance on
ad hoc submissions by firms in cases involving emergency safeguard measures or subsidies is
unlikely to prove a satisfactory permanent substitute for agreement on a more uniform
statistical basis for the implementation of the GATS in the case of banking – or indeed of
other – services.

Box 2
COMPENSATION AND SUSPENSION OF CONCESSIONS

The issue of compensation or suspension of concessions arises in connection with the

“nullification and impairment” of benefits under WTO agreements resulting from breaches of
rules or obligations (for example, through subsidies or dumping) or from certain actions
consistent with them such as safeguard measures. In the latter case, the country taking
safeguard measures consistent with the WTO agreement is none the less obliged to endeavour
to maintain a substantially equivalent level of concessions vis-à-vis other member countries.
This requires compensation equivalent to the benefits subject to nullification and impairment.
Where breaches of rules or obligations are at issue, compensation and suspension of
concessions are available as part of mutually acceptable solutions to disputes or for the purpose
of retaliation. Mutually acceptable compensation is an option when the country whose
measures are the subject of the WTO’s procedures for dispute settlement fails to comply with
the recommendations of the Dispute Settlement and Appellate Bodies. Suspension of
concessions is permitted by the country or countries which invoked these procedures in the
event that agreement on mutually acceptable compensation proves impossible. The
concessions suspended with the authorization of the Dispute Settlement Body are to be
equivalent to the benefits whose nullification and impairment led to the initiation of the
procedures in the first place.
Application of equivalence here requires an approach to measuring benefits which is
applicable not only within a services sector but also across the subjects covered by the WTO
agreements. Under Article 22 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes, in considering what concessions or other obligations to suspend, the
country which made the complaint should first seek them in the same sector as that to which its
complaint applies. But if this does not prove practical, it may seek them in another sector under
the same agreement. Failing this, if circumstances are serious enough, it may seek concessions
or other obligations for suspension under another agreement.
“Sector” here means all goods in the case of goods trade, a principal sector in the Services
Classification List in the case of services trade, and defined property rights and obligations
under the Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights);
“agreement” refers to all the multilateral WTO agreements on goods (including the original
GATT) and selected other agreements in the case of goods, the GATS in the case of services,
and the Agreement on TRIPS in the case of intellectual property rights. Measurement of
benefits requiring cross-sectoral and cross-agreement comparisons presents a formidable
challenge and one which cannot even begin to be met in the absence of an agreed statistical
base for international trade in services.a
________________
a
The spirit, though not the letter, of the WTO agreements is likely to preclude suspension of concessions
and obligations directed at banking as compensation for nullification and impairment of benefits in other
sectors and agreements. Such suspension might threaten the stability of a country’s financial system and
would thus disregard the importance of ensuring such stability whose legitimacy as a policy objective is
acknowledged in the Annex on Financial Services of the GATS.
6

The establishment of a statistical basis for trade in services is complicated by the GATS
definition of international trade in services in terms of four Modes of Supply (rather than the
single category of cross-border transactions which applies to trade in goods).

• Mode 1 (from the territory of one country into the territory of another) takes place
when the service crosses national borders, the supplier and consumer being located in
different countries. The delivery can be carried out by various means of cross-border
communication including telephone, computer-mediated links, mail and courrier. Of
the four modes this alone is similar to that for traditional trade in goods.
• Mode 2 (in the territory of one country to a consumer from another) covers
consumption of services by temporary visitors (tourists, etc.) in countries where they
are not residents. It also includes activities such as ship repair abroad where the
services are applied to property owned by non-residents.
• Mode 3 (by a service supplier of one country in the territory of another) recognizes as
international trade in services supply through a commercial presence in a country
other than that of the supplier. In the case of banks, it thus includes services supplied
by means of branches, subsidiaries, representative offices and joint ventures. As a
result of this definition, various forms of foreign investment are included in
international trade in services.
• Mode 4 (by supply through the presence of natural persons in a country of which they
are not permanent residents) covers services supplied by both self-employed persons
and employees from another country during temporary stays in the recipient country.
Typical examples in the case of banking services would be managers and computer
specialists. No definition of temporary stay is provided by the GATS. It may differ
for different services but generally does not exceed five years.

The heterogeneous nature of the different Modes of Supply makes it impossible to specify a
single comparable measure of international trade in services applying to all of them. For most
of the subjects listed at the beginning of this section, the most frequent statistical requirement
would be the income or revenue accruing from the supply of the service to the supplying
country or its permanent residents. This statement applies in particular to the valuation of
offers and commitments for Mode 3 which has been the principal focus of the negotiations on
banking services.

An exception to the statistical requirement for income or revenue is emergency safeguard

measures for which a measure of the scale of the commercial presence of foreign firms, such
as their share of total assets or capital would probably be required, as explained in box 1.
Another might be subsidies for which a methodological framework has yet to be developed.
But, as should be clear from the description of actual and potential statistical data bearing on
the Modes of Supply for banking services in section E, in practice, there is often no
alternative to the use of various different indicators of the scale of trade in services which in
most cases are unsatisfactory for this purpose.

C. VOORBURG GROUP

In 1986, the year of the beginning of the Uruguay Round, the Voorburg Group (named after
the location in the Netherlands of its first meeting) was established with the objective of
developing services statistics. This was an initiative of Statistics Canada and the United
Nations Statistics Office (UNSO) based on recognition: (i) that existing international bodies
lacked the resources for the work required by an increasingly important field; and (ii) that this
work would involve difficult conceptual issues on which lack of an agreed approach was
 7

likely to complicate recourse to the usual institutions and procedures for carrying it out. The
first tasks of the Group were to include the development of indicators of price and quantity
and of classification of services activities. Under the latter heading, the Group was to
contribute to the relevant sections of the International Standard Industrial Classification
(ISIC) of All Economic Activities (which is designed to foster the international comparability
of economic indicators for economic activities grouped as far as possible by their organization
in productive units) and of the Central Product Classification (CPC) then being developed
(which is intended to serve as a standard for the activity classification of outputs including
those of the services sector).

Initially, participation in the Voorburg Group was limited to experts from selected developed
countries, UNSO, and the statistical office of the European Communities (EUROSTAT).
Representatives of other major international organizations such as GATT, IMF, OECD,
UNCTAD and the World Bank attended the first meeting as observers. Gradually, the
Group’s meetings were opened up to other countries (including developing ones) such as
Republic of Korea and Mexico and selected European transition economies. The list of those
attending international Voorburg meetings included experts from 9 developing or transition
economies in 2003 and 6 in 2004 – figures which in both cases none the less represented
limited proportions of the totals.3 This decision in favour of broader participation was the
result of the assumption by the Group of a new role as a source of knowledge transfer and did
not reflect full incorporation of these countries in its technical work.4

Much of the work of the Voorburg Group has continued to be on classification, output
measures (including the development of sectoral model surveys for this purpose), and price
indices (including reviews of best practices). The work on statistics for international trade in
services has ranged over such issues as cross-border trade, reporting systems, methodology,
national practices regarding compilation, and the output or participation in trade of foreign
affiliates. The specifically sectoral work on finance and insurance has been limited to papers
on the latter.

D. INTERAGENCY TASK FORCE ON STATISTICS OF

INTERNATIONAL TRADE IN SERVICES

In 1994, an Interagency Task Force was established in response to a request from the GATT
and UNCTAD to the UNSO with the objective of strengthening cooperation between
international organizations concerning statistics for trade in services and of promoting the
development of concepts, definitions and classifications. The Task Force consisted of
representatives of the United Nations, OECD, the European Communities, IMF, UNCTAD,
and the WTO, and in 1996, drafting began of a manual intended to meet statistical
requirements related to the GATS and the needs of other users. The process was slowed by
the novelty of the subject, the politically controversial nature of some aspects of the task, the
difficulties of coordinating the contributions and of obtaining the approval of the different

3
See http://www4.statcan.ca/english/voorburg/2004-background.htm.
4
“For example, in the last ten years, the Voorburg took an explicit decision to open its meeting to observers
from less advanced countries, so that they could benefit from the discussion of the contributing members.
Doing so, the Group implicitly took on a new function (role) of knowledge transfer on the subject of service.
This was in response to the demand of the United Nations Statistical Commission (UNSC), which felt, quite
rightly, that part of the mandate of the Voorburg Group was to help knowledge transfers” Voorburg Group
(2005: 10).
8

members of the Task Force, and changes in the drafters. Eventually, the Manual on Statistics
of International Trade in Services (United Nations, 2002) was published in 2002.5

The Manual surveyed the data available concerning trade in services and their limitations in
the context of WTO negotiations. It also proposed guidelines for the extension of existing
statistics and for the establishment of a new framework for foreign affiliate trade in services
(FATS) statistics, which would cover services supplied through foreign affiliates (and thus
through Mode of Supply 3). The production of FATS statistics is a project which will require
several years to come to fruition, and thus will not have an impact on the negotiations of the
Doha round.

The Manual proposes an approach to implementation of its recommendations on the basis of

10 elements. Five of these elements are specified as “core”. Three are directed at
improvements in the classification of activities in the balance-of-payments statistics for
services and the breakdown of statistics on trade in services between residents and non-
residents by partner countries. The other two concern compilation of FDI statistics
disaggregated by activity and of basic FATS statistics. The five non-core recommendations
include further detail for balance-of-payments and FATS statistics, collection of statistics
relevant to trade in services through the presence of natural persons (Mode 4), separation of
trade with related parties from that with unrelated parties, and the allocation of transactions in
services trade among the four different GATS Modes of Supply.

Banking services will be covered by the eventual compilation of FATS statistics but the
programme envisaged in the Manual would not involve significant progress in the
disaggregation of such services in accordance with the classification of activities in the GATS
Annex on Financial Services (given in Annex 2 of this paper). The approach to implementation
recommended by the Manual is serving as the framework for future work of the members of the
Interagency Task Force as well as for technical assistance at the country level.

E. EXISTING DATA

Statistics relevant to the different GATS Modes of Supply for international trade in banking
services are currently available under the following headings:

1. cross-border trade in financial services as classified in IMF balance-of-payments

statistics (cross-border trade);
2. supply through the temporary presence of natural persons (natural persons);
3. local lending by international banks (bank lending);
4. FDI and cross-border mergers and acquisitions (M&A) in financial services (financial
FDI/M&A);
5. financial output and other indicators of aggregate financial activity in national
accounts and FATS statistics (aggregate indicators);
6. numbers and assets of foreign banks in selected jurisdictions (foreign bank presence);
7. income statements of banks (bank accounts);
8. trading in countries’ financial markets (trading).

5
See on the duration of the later stages of work on the Manual I have benefited from information
furnished by Julian Arkell who assumed the main responsibility for drafting in 1998.
 9

These headings do not include Mode of Supply 2, to which relatively low priority has been
accorded in work on trade in services so far.

As will be evident from the discussion which follows, the first six of these data categories do
not include measures corresponding to international trade in services for Mode of Supply 3
under the activity headings of the GATS Annex. It is also noteworthy that their sources are
mostly official systems of data compilation. Categories (7) and (8), on the other hand, would
depend on data already generated by private sector entities in connection with their own
activities.

1. Cross-border trade

Payments due to cross-border trade in financial services (Mode 1 of Supply) are part of Other
Services in IMF balance-of- payments statistics. The activities covered under this heading are
financial intermediary and auxiliary services (except those of insurance enterprises and
pension funds), and the payments and transfers between residents and non-residents in the
statistics are intermediary service fees and commissions and other fees related to transactions
in securities. The statistics for such payments and transfers can be considered as analogous to
those for trade in goods and provide an indication of total cross-border income flows. But
they are at a high degree of aggregation and thus cannot be used for analysis of transactions
under Mode of Supply 1 of the GATS in accordance with the classification of financial
services other than insurance ((v) – (xvi)) of the Annex. Improvements which can be
envisaged as part of revision of the IMF Balance of Payments Manual are not likely to have a
major impact on this situation.6

2. Natural persons

Receipts accruing to a country from the income of persons of one country temporarily present
in the territory of another country (Mode of Supply 4) are included in statistics for current
transfers in the current account of the balance of payments under the headings of
compensation of employees and workers’ remittances.7 But receipts under this heading due to
the supply of financial services cannot be distinguished separately owing to the absence of the
required level of disaggregation of the statistics. The work of the Technical Sub-group on the
Movement of Persons – Mode 4, established by the United Nations Statistical Commission in
2004, is to focus on overall improvement of statistics under this heading, including such
issues as the concept of residence and what payments should be included in remittances. This
is unlikely to affect significantly the position regarding sectoral disaggregation and thus
relevance to statistics on banking services.

6
For cross-border services transactions, the Manual of Statistics of International Trade in Services
(United Nations, 2002) recommends use of the Extended Balance of Payments Services Classification
(EBOPS), a classification with greater detail than that of the IMF Manual for many services but not for
financial services other than insurance.
7
“Compensation of employees” consists of wages, salaries, and other benefits earned by individuals in
economies other than those in which they are residents for work performed for residents of those
economies. “Workers’ remittances” are those of migrants employed in their new economies and
considered residents there (i.e. persons who stay or are expected to stay in these economies for a year
or more). The distinction between these two categories can be difficult to apply in practice (see IMF,
1993: paras. 269, 272 and 302).
10

3. Bank lending

The consolidated international banking statistics of the BIS can be used to indicate changes in
the scale of the activities of foreign banks in different countries (Mode of Supply 3 of the
GATS).8 Under the total foreign claims of reporting banks, the local claims of their foreign
offices in local currency are separately distinguished. A more complete picture of the scale of
their commercial presence in foreign countries would need to include also the local claims of
their foreign offices in foreign currencies, which are not shown separately in the BIS
statistics. Moreover, a limitation of this reporting system is that it includes only a few
developing countries, omitting, for example, the Republic of Korea whose banks now have a
substantial commercial presence outside their home country. Nevertheless, the rapid increase
in the proportion of total foreign claims represented by local claims in local currency provides
a useful indication of the growing importance of affiliates of foreign banks in the financial
markets of developing and transition economies.

4. Financial FDI/M&A

In many OECD but fewer non-OECD countries, a breakdown of FDI figures by activity is
available (WTO, 2003: 33). But for financial services, the disaggregation does not generally
go beyond the categories of financial intermediation, insurance (disaggregated into three
subcategories), and activities auxiliary to financial intermediation. Such disaggregation does
not correspond even approximately to that of the Annex. FDI figures can at most provide an
indication of growth of supply through Mode of Supply 3 and of the overall scale of the
commercial presence of foreign affiliates in different activities. More promising for this
purpose are data for cross-border M&A since information about the enterprises involved will
generally make possible more precise inferences as to which financial activities are involved.
Data on M&A deals are available from sources such as Thomson Financial.

For most purposes, suitable measures of “international trade” under Mode of Supply 3 involve
income or turnover (see section B). Revenue, profits, value added or gross value of
enterprises supplying services can serve here. Stocks or flows of investment are not a
satisfactory proxy. However, stocks of assets may eventually be an indicator relevant to
decisions regarding safeguard actions once the GATS has been extended to cover such actions
(see box 1).

5. Aggregate indicators

One indicator of the output of financial services relevant to assessment of actual and potential
supply in a country through all four Modes of Supply is value added in national accounts. The
value added of banking services is in principle measured from interest payments to and from
financial enterprises, fees and commissions, and other property income. Traditionally,
measurement has often been hampered by difficulties in distributing interest payments
between financial and non-financial firms with the result that estimates of value added were
highly approximate for many countries and not even included in GDP for others. Recent years
have witnessed considerable improvements in the coverage of the output of the financial

8
These statistics are available in the quarterly publication of the BIS, BIS Quarterly Review:
International banking and financial market developments, www.bis.org/publ/quarterly.
 11

services sector in national accounts, although there are still widespread shortcomings.9 But
even where statistics of the value added due to financial services are available, they provide
only a guide to the overall scale and growth of the sector. They do not provide a breakdown
of such value added among the different activities of the sector or of that between domestic
and foreign firms.

Eventually, the FATS statistics recommended by the Interagency Task Force and defined in
section D will provide information for several measures of aggregate activity of the financial
sector particularly relevant to Mode of Supply 3. These statistics are to cover a broad range of
economic indicators which will include some or all of the following: sales, employment,
value added, exports and imports, number of enterprises, assets, net worth, operating surplus,
capital formation, income taxes, expenditure on research and development, and compensation
of employees.

At the aggregate level, (i.e. without a detailed geographical or activity breakdown) FATS
statistics are already available in the great majority of OECD countries for numbers of
employees, turnover and value added for foreign affiliates in the case of inward investment
but are much less widely available in the case of outward investment (WTO, 2003: 32–3).
However, as noted above, the production of detailed FATS statistics globally is a long-term
project so that they cannot be expected to be available during the Doha round. But even with
the proposed activity breakdown in accordance with ISIC Categories for Foreign Affiliates
(ICFA) the FATS statistics for financial services other than insurance will show
disaggregation involving only two subsectors, financial intermediation except insurance and
pension funding and activities auxiliary to financial intermediation except insurance and
pension funding (see Annex 2 of this paper). This will not permit a matching of FATS
statistics with the activity classification of the GATS Annex on Financial Services.

6. Foreign bank presence

Relevant to GATS Mode of Supply 3 are statistics for the number of foreign banks in various
jurisdictions including developing countries. For a long time, the principal source for such
statistics was The Banker, which, however, now publishes them less frequently. Such data are
also available for selected countries and regions on a one-off basis, for example, from the
European Commission (Commission of the European Communities, 2008), and the European
Central Bank (European Central Bank, 2005 and 2008). A shortcoming of these statistics is
that they refer to numbers of banking entities (with or without breakdowns by types of entity)
and not to scale of their activities.

Other statistics useful in the context of Mode of Supply 3 are those for the share of the assets
and capital of countries’ banks owned by foreign institutions. These data are likely to be
relevant to rules eventually developed for safeguards as part of the GATS (see box 1). They
are available on a non-systematic basis in one-off studies from international institutions and
articles in periodicals such as The Banker.10 Moreover, for many banks, foreign ownership
could be identified from information on banks’ principal shareholders available through
Bankscope, a data base produced by Bureau van Dijk Electronic Publishing in collaboration

9
These shortcomings are indicated by the fact that the 1993 System of National Accounts (SNA) still
accommodates for financial intermediaries “the convention proposed in the 1968 version of the SNA
whereby the whole of the output is recorded as the intermediate consumption of a nominal industry” –
a convention which “makes total GDP for the economy as a whole invariant to the size of the estimated
output” (United Nations, 1993: para 6.126).
10
See, for example, Committee on the Global Financial System (2004: 9), European Central Bank
(2005: table 5) and World Bank (2008).
12

with Fitch Ratings and other publishers of financial information such as Moody’s, Standard
and Poor’s and Reuters.

7. Bank accounts

The income statements of commercial banks and their notes provide data on net interest
income (interest income minus interest expense), fees and commissions, trading income and
investment income. Such data have considerable potential for assessing actual and potential
market size under Mode of Supply 3. Net interest income is income from activities covered by
activities (v) (acceptance of deposits and repayable funds), (vi) (lending) and (vii) (financial
leasing) of the GATS Annex. Fees and commissions include (without necessarily being
coextensive with) income from activities covered by (viii) (payment and money transmission
services), (ix) (guarantees and commitments), (xi) (participation in securities issues), (xii)
(money broking), (xiii) (asset management), (xiv) (settlement and clearance), and (xvi)
(advisory, intermediation other auxiliary services). Trading income is earned from trading the
instruments and securities classified under activity (x) (trading).

The income statements of investment banks and brokers cover categories of income classified
under headings similar to those of banks but categories whose relative importance differs
from that for commercial banks. This distinction is not of practical importance in statistical
data for banks to the extent that the same entity undertakes the activities of investment
banking and broking as well as of commercial banking.

The correspondence between the categories of income in the income statements of banks and
their notes to the activities in the classification of the Annex is only approximate. Moreover,
allowance must be made for variation among countries in the quality of the data in firms’
financial reports. Nevertheless, the statements and notes are generally a source of information
which can be used for estimates of the order of magnitude of the value of business for major
categories of activities. As such, they can provide an indication of the size of the potential
market for “imports” of banking services via Mode of Supply 3.

Assembling such data for member countries of the WTO would be task which could be
undertaken either through a central data base or by statisticians at country level. A central data
base could make use of information in a system such as Bankscope (see E.6 above) which
facilitates access to the financial statements of banks in most countries of the world.
Alternatively, national statisticians could assemble the information according to an agreed
format for the financial statements of their banks.

Annex 1 exemplifies the use of data in the income statements and notes of Jordanian banks –
Islamic as well as conventional – to illustrate the procedures proposed here. Jordan was
chosen for this purpose owing to the manageable size of its banking sector and the quality of
banks’ financial reports.11 The data highlight some inevitable approximations and conceptual
problems of these procedures.

Exhibits 1 and 2 show the income statements of two banks, one conventional and one Islamic.
The notes to the exhibits indicate the correspondence between the items in these statements
and the categories of activity listed in the GATS Annex. Exhibit 3 shows the items in the
income statements of Jordanian after aggregation of these items under headings
corresponding to these categories.

11
Three banks included in Bankscope were omitted owing to the lack of detail in their published
income data or to the availability only of interim six-month figures.
 13

The income included under the different activities headings in the three exhibits is net
operating income, i.e. the sum of net interest and non-interest income serving as the revenue
pool from which a bank will meet its expenses and generate a profit. Net income after the
deduction of expenses by activity is not generally available for banks owing to the
impossibility of allocating costs – of which a high proportion are fixed – to different
activities. Thus, the income figures in the exhibits of Annex 1 do not include the non-interest
costs of the banks whose results are covered.

Many of the column headings in exhibit 3 involve more than one activity from the
classification of the GATS Annex, reflecting the lack of a one-to-one correspondence with
banks’ income statements. One example of this is the principal activity of conventional banks
as credit institutions, namely receiving deposits and other repayable funds from the public and
granting credits for their own account, which involves both activity (v) of the GATS Annex
(acceptance of deposits and repayable funds) and activity (vi) (lending of all types). In the
exhibit 3, for conventional banks, (v) and (vi) have been aggregated with (vii) (leasing),
which is not classified separately in the income statements of conventional Jordanian banks.

The reporting procedures for the banks covered by the exhibits are not completely uniform.
This is true, for example, of the inclusion in operating income of the recovery of loans
previously written off, a procedure followed by most but not all Jordanian banks. For
example, since inclusion of loans recovered is the procedure followed by the great majority of
the conventional banks in exhibit 3, in the interests of uniformity in the appropriate column
((vi) & (vii)) there are blank spaces for banks not following this procedure.

There are special problems in matching the classification of income in the financial
statements of Islamic banks with the activity classification of the GATS Annex. This is not
surprising since the latter was clearly designed for conventional banks. Thus, for example,
Islamic banks cannot be considered as credit institutions owing to the prohibition of interest-
bearing debt. However, a large part of the business of Islamic banks, like their conventional
counterparts, consists of serving as intermediaries between sources and users of funds in their
role as managers (mudarib) of investment accounts. Narrowly interpreted, this role
corresponds to activity (xiii) (asset management) of the Annex but in order to bring out its
analogousness to the role of conventional banks as credit institutions, the pertinent columns in
exhibit 3 are denoted as (v) & (xiii).

8. Trading

Income from participation by investment banking and securities firms and certain other
specialist firms in the trading of various financial instruments or contracts (principally stocks
and derivatives) can be estimated from turnover figures for such trading through their
multiplication by percentage spreads (i.e. the percentage difference between the prices at
which instruments or contracts are bought and sold) and by percentage commissions on
transactions. Such income is relevant to valuation and assessment of international trade in
banking services under Mode 3 (principally activities (x) and (xi) of the GATS Annex).

For organized exchanges, the turnover data are available from the exchanges themselves or in
various annuals and other publications such as those of the International Finance Corporation
of the World Bank for stocks in emerging markets. Data on spreads and possibly other fees
are likely to be available from the exchanges themselves.

For OTC instruments, the data on turnover and spreads differs among countries according to
trading practices, the availability of instruments, and government regulation. The most
generally accessible data are for spot trading in foreign exchange and trading in the secondary
markets for government bonds. The picture regarding data on trading in OTC derivatives (of
14

which the most important are usually forward exchange contracts – including non-deliverable
forwards,12 foreign exchange options, interest-rate swaps, and forward rate agreements) is less
homogeneous, as is illustrated by the survey of JPMorgan Securities summarized in box 3.

Box 3
STATISTICS FOR OTC FINANCIAL INSTRUMENTS
IN SELECTED EMERGING MARKETS

A survey of JPMorgan (JPMorgan, 2005), provides information on data available for OTC
instruments in 25 emerging markets of which 6 were in Latin America (Argentina, Brazil,
Chile, Columbia, Mexico and Venezuela), 10 in Central and Eastern Europe, the Middle East
and Africa (Czech Republic, Hungary, Israel, Poland, Romania, Russian Federation, Saudi
Arabia, Slovakia, South Africa and Turkey) and 10 in Asia (China, Hong Kong (China), India,
Indonesia, Malaysia, Philippines, Singapore, Republic of Korea, Taiwan Province of China
and Thailand).
For the Latin American markets, data are provided for the value of spot trading in foreign
exchange and of trading in the secondary markets for government debt for all except
Venezuela. Bid-offer spreads are also given for 3 markets for the former type of trading and
for 4 markets for the latter. Information on turnover in derivatives (forward exchange contracts
including non-deliverables, foreign exchange options, interest-rate swaps, and forward rate
agreements) is provided for only 2 markets, and selected bid-offer spreads for 4.
For Central and Eastern European, Middle Eastern and African markets, data are provided for
all markets except Romania for spot trading in foreign exchange and the associated bid-offer
spreads. Data are also provided for turnover in the secondary markets for government debt for
all markets except Saudi Arabia and Slovakia where the markets are still illiquid. Bid-offer
spreads are also given for 6 markets. The data for trading in forward exchange contracts
include all markets except Romania, bid-offer spreads also being given for 7 of them. For
selected other OTC derivatives (foreign exchange options, interest-rate swaps, and forward
rate agreements) turnover is provided for all markets except Romania and bid-offer spreads for
6 markets (though even for these markets the coverage of contracts included is not complete).
For the Asian markets, data are provided for 8 markets for the value of spot and deliverable
forward trading in foreign exchange, and for all 10 for that of trading in the secondary markets
in government debt, bid-offer spreads also being given in each case. For selected other OTC
derivatives (non-deliverable forwards, foreign exchange options, interest-rate swaps, and
forward rate agreements) data are provided for both turnover and bid-offer spreads.

12
Non-deliverable forwards, an innovation of the mid-1990s, are forward exchange transactions where
eventual settlement of the future leg is in a currency other than that to which the forward exchange rate
refers. The currency chosen to replace the reference currency will typically be freely exchangeable in a
liquid market. Non-deliverable forwards facilitate hedging and speculation in emerging-market
currencies.
 15

F. POLICY SUGGESTIONS

This paper has reviewed gaps in existing statistics for international trade in banking services.
These gaps are already a serious handicap for assessment exercises for such trade and for
valuation of offers and commitments in WTO negotiations, and will be a problem to be
confronted in decisions on compensation in dispute settlement for services under the WTO
agreement and in the context of an eventual extension of GATS rules to cover emergency
safeguard measures and subsidies. These gaps can be remedied to some extent through
ongoing efforts to extend the framework for international trade in banking services and
through one-off surveys of financial activities such as trading in selected countries. However,
these initiatives will not provide on a continuing basis statistics corresponding to the
categories of financial activity in the GATS Annex for major purposes which are already, or
likely to become, part of the rules of the GATS.

The suggestion of this paper is that for several of these purposes, use can be made of
information in the income statements of banks which have the advantage of being regularly
updated and whose categories can be approximately matched with the definitions of financial
activities in the Annex. This information can be obtained through a data system such as
Bankscope which facilitates access to the financial statements of banks in most countries of
the world. Alternatively, one could envisage delegating to national statistical bodies the task
of assembling the relevant data according to a standard format closely related banks’ income
statements as suggested in section E. Either approach would take advantage of the accounting
work undertaken by banks as part of their normal disclosure obligations.
16

REFERENCES

Commission of the European Communities (2008). European Financial Integration Report 2008,
Brussels.
Committee on the Global Financial System (2004). Foreign Direct Investment in the Financial Sector
of Emerging Market Economies. Basel, BIS, March.
European Central Bank (2005). Banking structures in the new EU Member States, January. Available
at: www.ecb.int/pub/.
IMF (1993). Balance of Payments Manual (fifth edition), Washington, DC.
JPMorgan Securities Inc. (2005). Local Markets Guide – Global Edition, February.
Raghavan C (2002). Developing Countries and Services Trade. Penang, Malaysia, Third World Network.
United Nations (1993). System of National Accounts 1993. Published jointly with CEC, IMF, OECD
and WB (Inter-Secretariat Working Group on National Accounts). Brussels/Luxembourg, New
York, Paris and Washington, DC.
United Nations (2002). Manual on Statistics of International Trade in Services. Published jointly with
EC, IMF, OECD, UNCTAD and WTO (ST/ESA/STAT/SER.M/86). Geneva, Luxembourg,
New York, Paris, Washington, DC.
Voorburg Group (2005). Strategic vision of the Voorburg Group on Services Statistics for 2005–2008,
background document prepared for the 36th session of the United Nations Statistical
Commission, March. Available at: http://www4.statcan.ca/english/voorburg/2004%20ottawa/
papers/2004-087.pdf.
World Bank (2008). Global Development Finance 2008, Washington, DC.
WTO (2003). Measuring Trade in Services, a training module produced by WTO/OMC in
collaboration with the Inter-agency Task Force on Statistics of International Trade in Services,
November. Available at: www.wto.org/english/res_e/stats_e/services_training_module_e.
 17

ANNEX 1
INCOME FROM SELECTED ACTIVITIES OF JORDANIAN BANKS

Exhibit 1
CONSOLIDATED INCOME STATEMENT OF ARAB BANKING CORPORATION
(JORDAN), SELECTED ITEMS FOR 2003–2004
(Jordanian dinars)

2004 2003

Net interest income 9,907,874 8,485,181

Net commission 1,570,972 1,372,696
Credit facilities-direct 600,643 610,321
Credit facilities-indirect 970,329 762,375
Gain from financial assets and instruments 2,511,484 2,671,504
Gain from available for sale investments 2,179,143 1,817,603
Gain from trading investments 9,655 701,426
Dividends received 322,686 152,475
Other operating income 6,261,692 4,762,631
Foreign exchange differences 515,801 530,121
Commission on customers’ funds trading 4,244,401 3,078,761
Revenue from credit card operations 430,964 420,020
Management and consultation fees 63,773 353,567
Transfers commission 164,379 137,289
Recovery of loans previously written off 489,977 95,681
Capital gain 45,619 --
Others 301,778 147,192

Source: Arab Banking Corporation (Jordan), The Fifteenth Annual Report 2004.
Note: The following is an approximate and partial correspondence between items in this table and the
classification of activities in the Annex on Financial Services of the GATS (see Annex 2 below):
• Net interest income: (v), (vi), and (vii).
• Net commission: (v), (vi), and (vii).
• Gains from financial assets and instruments: (x).
• Foreign exchange differences: (x) (B).
• Commission on customers’ funds tradings: (x), (xii), (xiv), and (xvi).
• Revenue from credit card operations: (viii).
• Management and consultation fees: (xiii) and (xvi).
• Transfers commission: (xiv).
• Recovery of loans previously written off: (vi) and (vii).
• Capital gain: (x).
18

Exhibit 2
INCOME STATEMENT OF ISLAMIC INTERNATIONAL ARAB BANK
CORPORATION, SELECTED ITEMS FOR 2003–2004
(Jordanian dinars)

2004 2003

Mudarib share of profit for managing unrestricted

investment accounts (IA) 2,646,500 3,076,759
Deferred sales 4,410,397 5,561,904
Financing 334,456 428,047
Investment in commodities 1,173,550 926,069
Investment in Islamic Sukuks 42,115 26,500
Ijara 3,422 --
(less)
Revenues of unrestricted IA 2,721,046 3,171,509
Allocation to investment risk fund 596,394 694,252
Profit from investments financing and deferred sales 2,043,039 2,011,457
Agent’s share of profit from restricted IA 326,378 299,170
Net revenues of banking services 835,186 535,798
Other operating revenues 655,829 537,147

Source: Islamic International Arab Bank, Annual Report 2003/2004.

Note: (1) The following is an approximate (and partial) correspondence between items in this table and the
classification of activities in the Annex on Financial Services of the GATS (see Annex 2 below):
Mudarib share of profit for managing unrestricted investment accounts: (v) & (xiii).
• Deferred sales: (xiii).
• Financing: (xiii).
• Investment in commodities: (xiii).
• Investment in Islamic Sukuk: (xiii).
• Ijara: (vii).
• Profit from investments financing and deferred sales: (x).
• Agent’s share of profit from restricted investment accounts: (xiii).
• Net revenues of banking services: (viii).
(2) Selected terms:
• Mudaraba is a partnership between capital and work. In the case of the management of investment
accounts the holders of the accounts are the owners of capital and the Islamic bank as mudarib (working
partner) receives a share of profits from investing the funds.
• Deferred sales (murabaha) involve contracts in which the Islamic bank purchases goods at the request of
a client who makes deferred payments that cover costs and an agreed profit margin for the bank.
Murabaha is the most widely used instrument of Islamic finance.
• Investment in commodities qualifying as speculation is not permitted. Amongst permitted forms is
commodity murabaha, a short-term interbank deposit or placement by an Islamic bank in a conventional
bank whose return is backed by the conventional bank’s operations in commodity markets.
• Sukuks are instruments similar to conventional asset-backed bonds where the risk and return associated
with the assets belong to the sukuk holder.
• An ijara is a lease contract where the return to the Islamic bank acting as lessor is rent or a share of the
profits earned from the use of the equipment or property covered by the lease.
• Liabilities in the form of risk-bearing instruments whose balance-sheet counterparts are real assets
earning a variable rate of return linked to their performance are consistent with Islamic law. Such
investment accounts have a number of different names corresponding to differences in their contractual
terms such as “participation term certificates”, “profit and loss sharing certificates”, and “investment
deposit certificates”. Restricted investment accounts are subject to restrictions as to how the funds are to
be invested and as to their commingling with the bank’s other investment funds.
 19

Exhibit 3
INCOME STATEMENTS OF JORDANIAN BANKS, SELECTED ITEMS FOR 2003–2004
(Jordanian dinars)

(x), (xii),
(vi) & (v), (vi) (xiv) &
Year (vii) & (vii) (viii) (x) (x) (B) (xvi) (xiii) (xiv) Other

Conventional Banks
Arab Banking
Corporation
(Jordan) 2004 489,977 11,478,846 430,964 2,557,103 515,801 4,244,401 63,773 164,379 301,178
2003 95,681 9,857,877 420,020 2,671,504 530,121 3,078,761 353,567 137,289 147,192
Arab Bank
Group 2003 586,982 99,364 47,152 749 60,184
Arab Jordan
Investment Bank 2004 700,139 9,312,396 1,651,689 1,140,806 78,936
2003 - 8,856,168 2,208,232 1,059,610 29,842
Bank of Jordan 2004 1,897,441 43,276,201 399,924 1,973,207 1,616,425 164,224
2003 812,998 37,955,296 315,461 490,319 2,263,578 123,217
Export &
Financial Bank 2004 9,550,084 3,912,740 309,856 707,828 1,885
2003 11,914,262 6,148,180 172,862 1,326,584 1,423
Housing Bank
for Trade and
Finance 2004 1,936,721 80,936,918 4,271,474 10,375,098 710,312 175,781 4,861,760
2003 53,044 69,724,136 3,131,121 14,126,758 143,448 167,171 3,524,317
Industrial
Development
Bank 2004 4,148,441 3,112,129 -440,243 60,544 281,552 25,388 75,688
2003 2,079,751 3,939,516 230,237 39,738 159,753 25,296 135,512
Jordan Kuwait
Bank 2004 407,351 45,292,401 673,752 4,798,287 2,835,006 123,542 5,526,258
2003 520,089 35,684,337 486,219 6,365,311 2,305,561 113,840 3,885,542
Jordan National
Bank 2004 2,619,207 43,908,884 78,891 2,106,894 2,214,083 45,512 308,677
2003 2,528,828 37,435,625 65,125 2,371,961 2,260,476 43,532 425,846
Société Générale
de Banque-
Jordanie 2004 4,167,780 287,083 416,688 144,041 4140 176,979
2003 2,389,200 178,226 597,972 98,679 3531 125,890
Union Bank 2004 13,453,861 5,312,124 2,583,931
2003 10,801,433 -9,567,290 1,732,409

/…
 20

Exhibit 3 (concluded)

(v) & (xiii) (vii) (viii) (x) (xiii) Other

Islamic banks
Islamic
International
Arab Bank 2004 2,039,617 3,422 835,186 2,043,039 326,378 655,829
2003 2,011,457 - 535,798 2,011,457 299,170 537,147
Jordan Islamic
Bank 2003 12,885,922 4,591,474 53,546 1,371,837 1,785,475
Source: Annual reports of banks listed.

Note: For the headings of the columns denoting activities from the classification of the Annex on Financial Services of the GATS
summary lists of items from income statements and notes are specified.
Conventional banks
• (vi) & (vii): recovery of loans previously written off; release of provisions; interest in suspense returned to income; net
revenue from recovered loans
• (v), (vi) & (vii): net interest income + net commission; fees on salaries accounts; account management fees, charges on
dormant and low-balance accounts
• (viii): revenue from credit card operations; telephone, post and Swift; commissions on returned cheques; invoice
processing; transfers; cheque books
• (x): gains from financial assets and instruments; other capital including revaluation gains; share in profits/losses of
subsidiaries and affiliates
• (x) (B): foreign exchange differences; foreign exchange trading/dealing income
• (x), (xii), (xiv) & (xvi): commission on customers' funds trading; brokerage commissions
• (xiii): management and consultation fees; asset management; safe box rent; stamp income

Islamic banks
• (v) & (xiii): mudarib share of profits from managing unrestricted investment accounts
• (vii): ijara
• (viii): banking services
• (x): profit from investments financing and deferred sales
• (xiii): agent's (mudarib's) share of profit from restricted investment accounts investment portfolio revenues
 21

ANNEX 2
SELECTED ACTIVITY CLASSIFICATIONS FOR FINANCIAL SERVICES

Annex on Financial Services of the GATS

Insurance and insurance-related services

(i) Direct insurance (including co-insurance):
(A) life;
(B) non-life.

(ii) Reinsurance and retrocession.

(iii) Insurance intermediation, such as brokerage and agency.

(iv) Services auxiliary to insurance, such as consultancy, actuarial, risk assessment and
claim settlement services.

Banking and other financial services (excluding insurance)

(v) Acceptance of deposits and other repayable funds from the public.

(vi) Lending of all types, including consumer credit, mortgage credit, factoring and
financing of commercial transactions.

(vii) Financial leasing.

(viii) Payment and money transmission services, including credit, charge and debit cards,
travellers cheques, and bankers drafts.

(ix) Guarantees and commitments.

(x) Trading for own account or for account of customers, whether on an exchange, in an
over-the-counter market or otherwise, the following:
(A) money market instruments (including cheques, bills, certificates of deposit);
(B) foreign exchange;
(C) derivative products including, but not limited to, futures and options;
(D) exchange-rate and interest-rate instruments including such products as swaps and
forward rate agreements;
(E ) transferable securities;
(F) other negotiable instruments and financial assets, including bullion.

(xi) Participation in issues of all kinds of securities, including underwriting and placement as
agent (whether publicly or privately) and provision of services related to such issues.

(xii) Money broking.

(xiii) Asset management, such as cash or portfolio management, all forms of collective
investment management, pension fund management, and custodial, depository and trust
services.
22

(xiv) Settlement and clearance services for financial assets, including securities, derivative
products, and other negotiable instruments.

(xv) Provision and transfer of financial information, and financial data processing and related
software by suppliers of other financial services.

(xvi) Advisory, intermediation and other auxiliary financial services on all activities listed in
(v) through (xv), including credit reference and analysis, investment and portfolio
research and advice, advice on acquisitions and on corporate restructuring and strategy.

IMF Balance of Payments Manual (5th edition)

1. Current Account
A. Goods and services
b. Services
5. Insurance services*
6. Financial services

* The Manual also recommends the recording of gross premiums and gross claims as
memorandum items owing to their usefulness for purposes such as trade negotiations.

ISIC Categories for Foreign Affiliates (ICFA) (the recommended activity classification for
FATS statistics)

ICFA headings/elements

9. Financial intermediation
9.1. Insurance and pension funding, except insurance and pension funding
9.2. Insurance and pension funding, except social security
9.2.1. Life insurance
9.2.2. Pension funding
9.2.3. Non-life insurance
9.3. Activities auxiliary to financial intermediation
9.3.1. Activities auxiliary to financial intermediation, except insurance and
pension funding
9.3.2. Activities auxiliary to insurance and pension funding
 23

UNCTAD DISCUSSION PAPERS

No. Date Author(s) Title

193 January 2009 Sebastian Dullien Central banking, financial institutions and credit
creation in developing countries

192 November 2008 Enrique Cosio-Pascal The emerging of a multilateral forum for debt
restructuring: The Paris Club

191 October 2008 Jörg Mayer Policy space: What, for what, and where?

190 October 2008 Martin Knoll Budget support: A reformed approach or old wine in
new skins?

189 September 2008 Martina Metzger Regional cooperation and integration in sub-
Saharan Africa

188 March 2008 Ugo Panizza Domestic and external public debt in developing
countries

187 February 2008 Michael Geiger Instruments of monetary policy in China and their
effectiveness: 1994–2006

186 January 2008 Marwan Elkhoury Credit rating agencies and their potential impact
on developing countries

185 July 2007 Robert Howse The concept of odious debt in public international
law

184 May 2007 André Nassif National innovation system and macroeconomic
policies: Brazil and India in comparative
perspective

183 April 2007 Irfan ul Haque Rethinking industrial policy

182 October 2006 Robert Rowthorn The renaissance of China and India: Implications
for the advanced economies

181 October 2005 Michael Sakbani A re-examination of the architecture of the

international economic system in a global setting:
Issues and proposals

180 October 2005 Jörg Mayer and Tripling Africa’s Primary Exports: What? How?
Pilar Fajarnes Where?

179 April 2005 S.M. Shafaeddin Trade liberalization and economic reform in
developing countries: Structural change or de-
industrialization?

178 April 2005 Andrew Cornford Basel II: The revised framework of June 2004

177 April 2005 Benu Schneider Do global standards and codes prevent financial
crises? Some proposals on modifying the
standards-based approach

176 December 2004 Jörg Mayer Not totally naked: Textiles and clothing trade in a
quota free environment
24

No. Date Author(s) Title

175 August 2004 S.M. Shafaeddin Who is the master? Who is the servant? Market or
Government?

174 August 2004 Jörg Mayer Industrialization in developing countries: Some

evidence from a new economic geography
perspective

173 June 2004 Irfan ul Haque Globalization, neoliberalism and labour

172 June 2004 Andrew J. Cornford The WTO negotiations on financial services:
Current issues and future directions

171 May 2004 Andrew J. Cornford Variable geometry for the WTO: Concepts and
precedents

170 May 2004 Robert Rowthorn and De-industrialization and the balance of payments
Ken Coutts in advanced economies

169 April 2004 Shigehisa Kasahara The flying geese paradigm: A critical study of its
application to East Asian regional development

168 February 2004 Alberto Gabriele Policy alternatives in reforming power utilities in
developing countries: A critical survey

167 January 2004 Richard Kozul-Wright Globalization reloaded: An UNCTAD Perspective

and Paul Rayment

166 February 2003 Jörg Mayer The fallacy of composition: A review of the
literature

165 November 2002 Yuefen Li China’s accession to WTO: Exaggerated fears?

164 November 2002 Lucas Assuncao and Domestic climate change policies and the WTO
ZhongXiang Zhang

163 November 2002 A.S. Bhalla and S. Qiu China’s WTO accession. Its impact on Chinese
employment

162 July 2002 Peter Nolan and The challenge of globalization for large Chinese
Jin Zhang firms

161 June 2002 Zheng Zhihai and China’s terms of trade in manufactures,
Zhao Yumin 1993–2000

160 June 2002 S.M. Shafaeddin The impact of China’s accession to WTO on
exports of developing countries

159 May 2002 Jörg Mayer, Arunas Dynamic products in world exports
Butkevicius and
Ali Kadri

158 April 2002 Yılmaz Akyüz and The making of the Turkish financial crisis
Korkut Boratav

157 September 2001 Heiner Flassbeck The exchange rate: Economic policy tool or
market price?
 25

No. Date Author(s) Title

156 August 2001 Andrew J. Cornford The Basel Committee’s proposals for revised
capital standards: Mark 2 and the state of play

155 August 2001 Alberto Gabriele Science and technology policies, industrial reform
and technical progress in China: Can socialist
property rights be compatible with technological
catching up?

154 June 2001 Jörg Mayer Technology diffusion, human capital and
economic growth in developing countries

153 December 2000 Mehdi Shafaeddin Free trade or fair trade? Fallacies surrounding the
theories of trade liberalization and protection and
contradictions in international trade rules

152 December 2000 Dilip K. Das Asian crisis: Distilling critical lessons

151 October 2000 Bernard Shull Financial modernization legislation in the United
States – Background and implications

150 August 2000 Jörg Mayer Globalization, technology transfer and skill
accumulation in low-income countries

149 July 2000 Mehdi Shafaeddin What did Frederick List actually say? Some
clarifications on the infant industry argument

148 April 2000 Yılmaz Akyüz The debate on the international financial
architecture: Reforming the reformers

146 February 2000 Manuel R. Agosin and Foreign investment in developing countries:
Ricardo Mayer Does it crowd in domestic investment?

145 January 2000 B. Andersen, Copyrights, competition and development:

Z. Kozul-Wright and The case of the music industry
R. Kozul-Wright

144 Dec. 1999 Wei Ge The dynamics of export-processing zones

143 Nov. 1999 Yılmaz Akyüz and Capital flows to developing countries and the
Andrew Cornford reform of the international financial system

142 Nov. 1999 Jean-François Financial development, human capital and

Outreville political stability

141 May 1999 Lorenza Jachia and Free trade between South Africa and the European
Ethél Teljeur Union – a quantitative analysis

140 February 1999 M. Branchi, Traditional agricultural exports, external

A. Gabriele and dependency and domestic prices policies: African
V. Spiezia coffee exports in a comparative perspective

UNCTAD Discussion Papers are available on the website at http://www.unctad.org. Copies of UNCTAD
Discussion Papers may be obtained from the Publications Assistant, Macroeconomic and Development
Policies Branch (MDPB), Division on Globalization and Development Strategies (DGDS), United
Nations Conference on Trade and Development (UNCTAD), Palais des Nations, CH-1211 Geneva 10,
Switzerland (Fax no: +41(0)22 917 0274/Tel. no: +41(0)22 917 5896).