Where should T-bills be reported in template F 01.01 – Balance Sheet Statement?

In the annual report published by the respective credit institution, T-bills are reported under “cash and cash equivalents” component. For this purpose, T-bills are usually considered to be balances that have a remaining term to maturity of up to one year, but generally less than three months. The listed instrument is issued by the Government of Malta and are therefore considered to be of a low risk nature. T-bills are also liquid instruments by virtue of the Central Bank of Malta which acts as a market-maker for Malta Government T-bills. Paragraph 7 of IAS 7 - Statement of Cash Flow provides that “cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. For an investment to qualify as a cash equivalent it must be readily convertible to a known amount of cash and be subject to an insignificant risk of changes in value. Therefore, an investment normally qualifies as a cash equivalent only when it has a short maturity of, say, three months or less from the date of acquisition.” In this respect, we deem that T-bills satisfy this definition.

Regulation (EU) No 680/2014 (ITS on Supervisory Reporting) establishes in Annex V (Reporting on financial information) that :

1. ‘Cash balances at central banks’ (row 030 of F 01.01) includes balances receivable on demand at central banks (see Part 2, chapter 1.1, paragraph 2 of Annex V).
2. ‘Debt securities’ are instrument held by the institution issued as securities that are not loan in accordance with ECB BSI Regulation (see Part 1, chapter 5.1, paragraph 26 of Annex V).

According to the ECB BSI Regulation currently in force (ECB/2013/33) “Debt securities” includes: ‘holdings of securities which give the holder the unconditional right to a fixed or contractually determined income in the form of coupon payments and / or a stated fixed sum at a specific date or dates, or starting from a date defined at the time of issue’. Additionally, a breakdown by original maturity is established: “up to one year; over 1 year and to 2 year; and over 2 year”.

T-bills are financial instruments that are neither receivable on demand nor against central banks therefore they shall not be classified as “cash balances at central banks”. Taking into account the definition provided in the ECB BSI Regulation, they shall be considered as debt securities and classified in the ‘accounting portfolio’ they belong to.