Higher investment by SFIs in 2010 despite further decline in transactions
In 2010, the transaction volume of special financial institutions (SFIs) in the Netherlands declined for the second year running. The inward and outward financial flows that multinational companies led through 14,300 SFIs in the Netherlands amounted to EUR 10,200 in 2010, whereas in the period from 2005-2008 the volume had still increased from EUR 5,200 billion to EUR 12,800 billion.
90% of the EUR 1,130 billion decline in 2010 was accounted for by the EUR 1,000 billion drop in transaction volume of U.S. companies to EUR 2,400 billion. In previous years, transactions with the United States had strongly increased, notably in 2008 when transactions soared more than EUR 2,050 billion on 2007. In part, transactions with the United States at the time related to the winding down and relocation of activities.
In contrast to the transaction volume, foreign assets and liabilities of SFIs in 2010 still showed an increase totalling EUR 2,450 billion. This growth is entirely due to direct investment consisting of participations and loans. Approximately three quarters of total inward and outward direct investment of the Netherlands takes place via SFIs.
Foreign direct investment (the Netherlands – outward foreign participations and loans) makes up 85% of the items on the assets side of the balance sheet of SFIs against 75% of the liabilities side (the Netherlands - inward). The remainder is composed of external positions in the capital market, banks, money market and derivates. Since 2007, recourse to these funding sources has dropped from EUR 720 billion to EUR 635 billion at year-end 2010. On balance, approximately 13% of outstanding direct investment of SFIs (EUR 275 billion) is funded externally. SFIs forming part of groups of financial institutions at year-end 2007 still accounted for 44% of these externally raised funds (EUR 323 billion). At year-end 2010, this share had halved to 22% (EUR 139 billion). At the same time, recourse of SFIs of non-financial institutions to external funding rose from EUR 397 billion in 2007 to EUR 477 billion in 2010.