26 June 2024

by Clive Jackson and Samo Boh

Closely monitoring how much credit banks provide to households and non-financial corporations is key for monetary policy. However, there are several factors which make observing these trends difficult when deriving credit supply from bank balance sheets. 

For example, securitisation and other loan transfers can change the outstanding amounts of loans on bank balance sheets, even though they do not affect the actual financing that has been provided to the real economy. Cash pooling, which is offered by banks to help corporate groups manage their liquidity more effectively, may also disguise real trends in credit supply. 

To account for these factors, the ECB has started to publish more detailed loan data that are adjusted for securitisation and other loan transfers, as well as for notional cash pooling. This adds to the adjusted data on loans for total lending to households and non-financial corporations, which have been available for some time.

Newly released adjusted breakdowns for bank loans

Loans to households by loan purpose: 

Loans to non-financial corporations by original maturity:

Securitisation and other loan transfers 

With securitisation, banks package loans into debt securities and sell them to investors on the financial market. This can shrink bank balance sheets without actually reducing credit supply. The adjusted loans series correct for securitisation and other loan transfers from and to bank balance sheets during each month. To provide a more complete picture of credit developments, repayments of principal by borrowers of loans that have been removed from bank balance sheets are also taken into account, where those data are available. 

Notional cash pooling services

In notional cash pooling, banks can provide overdrafts to participants in the pool as long as these are covered by the deposits of other participants in the pool. This can be a cheaper and more efficient way to manage cash than giving inter-company loans within the same group. However, from an economic point of view, these overdrafts do not mean that banks are providing additional financing to the economy, and they can distort the interpretation of true credit developments. We therefore adjust for them. 

Why adjustments matter

Chart 1 provides a detailed view of monthly loan transactions, comparing adjusted and non-adjusted figures to highlight the impact of various adjustments. The solid blue line represents the total adjusted transactions, which account for loan transfers, securitisation, and notional cash pooling, represented by the bars. Meanwhile, the dotted blue line shows the non-adjusted transactions, providing a baseline for comparison. 

Notable differences between adjusted and non-adjusted transactions can be observed in certain months. For example, there is a relatively large difference of €17 billion in November 2023 that was driven by net transfers. These sorts of differences in flows show how ignoring these factors can result in a misleading interpretation of the actual credit trends.As the volume of transactions changes with these adjustments, this also has an impact on annual growth rates. This is illustrated in Chart 2 for loans to households. For instance, in the case of loans for house purchases, the annual growth rate of non-adjusted loans turned negative in January 2024, indicating a contraction. However, the annual growth rate of adjusted loans remained positive at 0.5%. This difference in annual growth rates is mainly due to larger securitisations of housing loans in May 2023 and January 2024.

Further information

Press release: Monetary developments in the euro area

Manual on MFI balance sheet statistics – Section 7.4

The statistical classification of cash pooling activities

Related statistics

Loans vis-à-vis the private sector

The views expressed in each article are those of the authors and do not necessarily represent the views of the European Central Bank and the Eurosystem.