OVERVIEW
AVAILABILITY
SOURCES
DEFINITIONS
VALUATION AND BREAKS
FURTHER INFORMATION
OVERVIEW
The sectoral analysis of M4 and M4 lending provides additional breakdowns of liabilities to and claims on UK residents for certain items on the monetary financial institutions' (MFIs') balance sheet. These are broken down into three broad categories; other financial corporations (OFCs), private non-financial corporations (PNFCs), and the household sector.
AVAILABILITY
Data are available quarterly from 1963 Q1 and monthly from October 1997. These data are available not seasonally adjusted and seasonally adjusted.
Seasonally adjusted quarterly OFCs data is calculated as IOFCs M4/M4L plus NIOFCs M4/M4L. Given an increase in the volatility of the intermediate OFCs component, and the short run of monthly data available for that component, robust seasonal adjustment of the monthly IOFC and NIOFC series is not currently possible. The monthly seasonally adjusted data presented are estimates, the construction of which is detailed in an article in the November 2010 Bankstats (see
www.bankofengland.co.uk/statistics/ms/articles/art1nov10.pdf)
Publication of data will usually occur on the 21st working day following the end of the reporting period in the
Sectoral Breakdown of Aggregate M4 and M4 Lending statistical release and in Table A4 in
Monetary & Financial Statistics or subject to the published
schedule of releases and on the
Statistical Interactive Database.
SOURCES
Additional sectoral detail data is provided through two main sources:
- UK-resident banks; a sample of UK-resident banks report data directly to the Bank of England on the form BE. Around 150 banks with eligible liabilities (BT£46) in excess of £400mn (positive or negative), or private sector holdings (BT items £2H and £3H or £29D) in excess of £1bn report data on a monthly basis. All data are reported in sterling, with foreign currency data converted to sterling at the middle spot sterling exchange rate at 4pm on the last working day of the month.
- UK-resident building societies;From January 2008, data from building societies are collected on the same basis as for UK-resident banks, on the forms BT and BE on a monthly basis (see the article on Transition of building society statistical reporting in the January 2008 edition of Monetary and Financial Statistics). Prior to this, data for building societies were collected by the Financial Services Authority. These figures were based on a sample of societies, which were grossed up to achieve full coverage of the building society population in the published data.
All data are subject to revision if and when new information becomes available. For more information on revisions practices see the Explanatory Note on revisions, available here.
DEFINITIONS
Other financial corporations
Other financial corporations (OFCs) are private financial corporations other than monetary and financial institutions engaged primarily in the provision of financial services, such as financial intermediation, insurance companies and pension funds and activities auxiliary to financial intermediation (such as fund management). From September 2011, OFCs’ holdings of M4 include 35% of the sterling inter-MFI difference whereas an additional 35% of the sterling inter-MFI difference is deducted from OFC loans. For further details please see the September 2011 Monetary and Financial Statistics article ‘Estimation and allocation methods within money and credit data’. Prior to September 2011, 95% of the domestic sterling interbank (now inter-MFI) difference was allocated to OFCs’ holdings of M4. This followed a review of its causes (see page 101 of the June 1992 Economic Trends). OFCs' holdings of M4 include 95% of the sterling domestic inter-MFI difference following a review of its causes (see page 101 of the June 1992 Economic Trends). Seasonally adjusted quarterly OFCs data is calculated as IOFCs M4/M4L plus NIOFCs M4/M4L. Given an increase in the volatility of the intermediate OFCs component, and the short run of monthly data available for that component, robust seasonal adjustment of the monthly IOFC and NIOFC series is not currently possible. The monthly seasonally adjusted data presented are estimates, the construction of which is detailed in an article in the November 2010 Bankstats (see www.bankofengland.co.uk/statistics/ms/articles/art1nov10.pdf)
Private non-financial corporations
Private non-financial corporations (PNFCs) are companies that produce goods and/or provide non-financial services. They are mainly public limited companies, private companies and partnerships where these are distinct from their owners and not owned by government.
The household sector
The household sector comprises:
- Individuals, i.e. all the residents of the United Kingdom as receivers of income and purchasers of consumer products (for a more detailed breakdown of lending to individuals see Table A5. www.bankofengland.co.uk/statistics/Bankstats/current/index.htm of Monetary and Financial Statistics)
- Unincorporated businesses other than unlimited liability partnerships (sole traders)
- Non-profit institutions serving households, e.g. charities and universities.
VALUATION AND BREAKS
Housing associations
In order to bring their treatment into line with that in the National Accounts, housing associations were reclassified from non-profit institutions serving households in the household sector to private non-financial corporations in August 2005. Flows were adjusted for the change to both sectors; level data however were not break-adjusted.
Transit and suspense items
Holdings of M4 by and M4 lending to other financial corporations, private non-financial corporations and the household sector are affected by the allocation of reporters' transit and suspense items (for further details see the notes to the Monetary financial institutions' consolidated balance sheet).
Credit card data
Credit card data include data from building societies from 1992 Q4 onwards.
Banking Statistics Review
Revised banking statistics returns were introduced at the end of September 1997 to bring the UK into line with the European Systems of Accounts Standards 1995 (ESA95). This led to changes in the definitions of economic sectors. In particular, unlimited liability partnerships were re-classified into PNFCs and OFCs from the household sector. Adjustments were made to minimise the breaks in the time series of financial flows.
As a result of these changes, the individuals component of household sector M4 was only available quarterly, one month in arrears. For further details see the September 1997 article Outcome of the review of banking statistics, including effects on monetary and other banking statistics'.
Monthly sectoral data
As a result of the introduction of the new banking statistics returns at end-September 1997, comprehensive monthly sectoral data became available. Data from July 1996 to August 1997 are based on reporting by only about 100 banks, grossed up to represent the total banking sector. Data from September 1997 onwards have the same comprehensive coverage as the quarterly sectoral series.
Prior to September 1997, sectoral data for a short period was reported monthly on the Q1(M) form. Prior to July 1996, sectoral data was reported to the Bank on a quarterly basis only on the Q1 form.
Building Societies Statistical Review
In October 1998 a revised monthly building society form was introduced, bringing the building societies into line with ESA95 standards, and breaks in series occurred as definitions changed.
Data excluding the effects of loan transfers
Table A4.3 excludes the effects of loan transfers. Loan transfers reduce the size of lenders' balance sheets, and therefore reduce recorded lending. However, the indebtedness of borrowers is not affected by loan transfers. Therefore, when analysing sectoral borrowing activity, data excluding the effects of loan transfers are more appropriate. Prior to 2010 data, securitisations were the most common type of loan transfer. However from 2010 data onwards, all securitisations are reported on balance sheet (see below for more details).Loan transfers are most common in respect of lending to individuals e.g. portfolios of mortgages, credit cards and other loans to individuals. This is recognised by having the wider lending to individuals measure (Table A5) which incorporates lending by other specialist lenders, in addition to lending by MFIs'. Within lending to individuals, there is no impact from securitisations and loan transfers, because the effects of these transactions net out within the total.
Table A5 also includes lending to housing associations, which were included in Table A4 within non-profit making institutions serving households between March 1999 and July 2005. That change was made to be consistent with ESA95 and was backdated. In order to bring their treatment into line with that in the National Accounts, housing associations were reclassified from non-profit institutions serving households in the household sector to private non-financial corporations in August 2005. But secured lending to housing associations remains included within lending to individuals (Table A5).
Building societies transition to Bank of England reporting
Building societies' statistical reporting transitioned from the Financial Services Authority to the Bank of England on 1st January 2008, and some minor changes to the calculation of the sectoral analysis of M4 and M4 lendinghave been implemented. The effects of these have been removed from the flows data, and are small in terms of the amounts outstanding unless otherwise footnoted.
Securitisations Reporting
From January 2010 data onwards, all loans that have been securitised by MFIs will be included on the institutions' balance sheet for statistical reporting purposes. Some institutions reported securitisations on balance sheet prior to 2010, so their reporting did not change. However, other institutions brought back on to their balance sheets loans that had been securitised in the past. When these loans came back on balance sheet, an additional liability to the SPV was also brought on balance sheet, to balance out the increase in loans. This caused a level shift in various series in January 2010, as well as changing the coverage of various series from January 2010 data onwards. For more details, please see the February 2010 Monetary and Financial Statistics article "Statistical Reporting of Securitisations" by Jennifer Owladi.
FURTHER INFORMATION
Kirkham, L (2011), ‘Estimation and allocation methods within money and credit data’, Bankstats (Monetary and Financial Statistics) September 2011.
Hussain, F and Gilhooly, R (2010), 'Seasonal adjustment of M4 excluding intermediate OFCs (M4ex) - an update', Bankstats (Monetary and Financial Statistics) November 2010
Hussain, F and Maitland-Smith, M (2010) 'Seasonal adjustment of quarterly M4 excluding intermediate OFCs (M4ex)', Bankstats (Monetary and Financial Statistics) September 2010
Owladi, J (2010), 'Statistical Reporting of Securitisations', Monetary and Financial Statistics, February.
O'Connor, P (2008), 'Transition of building society statistical reporting', Monetary and Financial Statistics, January.
Hall, L (2004) 'Impact of securitisations and loan transfers activity on M4 lending' Monetary and Financial Statistics, November
Thorp, J (1997), 'Outcome of the review of banking statistics, including effects on monetary and other banking statistics', Monetary and Financial Statistics, September
Dooks, D and Finbow, G, (1992) ‘Investigating the domestic interbank difference’ Economic Trends, June, page 101-104.