Further details about M4 lending excluding lending to intermediate other financial corporations data

M4 lending (M4L) excluding lending to intermediate OFCs (M4Lex) is a more economically relevant measure of credit than the headline measure of M4L.

View the data

Availability

Data are available quarterly, from 1997 Q4 onwards for amounts outstanding and from 1998 Q1 onwards for flows. Data are seasonally adjusted.

A monthly version is available from July 2009 onwards.

Sources

UK-resident banks and building societies report data directly to us on Form AL. Approximately 100 banks and building societies with eligible liabilities over £400 million or private sector deposits or loans over £1,000 million report the data on a monthly basis.

Definitions

In 2007, we set out a proposal to modify the measurement of UK M4 by excluding the money holdings of some OFCs, to obtain a better measure of those money holdings that are likely to be used as a medium of exchange. Several types of OFCs mainly provide intermediation services to banks and building societies. Banks' and building societies' loans and advances to these 'intermediate OFCs' are excluded from this measure of credit.

Intermediate OFCs are defined as:

  • non-bank credit grantors
  • mortgage and housing credit corporations
  • bank holding companies
  • securitisation special purpose vehicles
  • other activities auxiliary to financial intermediation

In addition to the loans and advances to these five types of OFCs, sterling loans and advances arising from transactions between banks or building societies and 'other financial intermediaries' belonging to the same financial group are excluded from this measure of credit. Until December 2010, estimates of these intra-group loans and advances were based on anecdotal information provided by a sample of banks. From January 2011 onwards, these intra-group deposits are collected as part of the reporting on Form AL. Banks' and building societies' holdings of securities issued by their own securitisation vehicles are also excluded from this measure of underlying credit to the UK economy. 

The data on M4L excluding intermediate OFCs are constructed as follows:

Seasonally adjusted M4Lex is calculated as households' M4L plus private non-financial corporations’ M4L plus non-intermediate OFCs’ (NIOFCs) M4L. More details are available in the article published in Statistics article 'Seasonal adjustment of quarterly M4 excluding intermediate OFCs (M4ex)'. Following a review of the seasonal adjustment method for non-intermediate OFCs once a sufficient run of monthly data was available, changes were made to the seasonally adjusted measures of M4 and M4 lending to bring them into line with the usual approach. The changes are detailed in Statistics article ‘Modifications to the seasonally adjusted measures of M4 and M4 lending excluding intermediate OFCs’.

Valuation and breaks

Building societies transition to Bank of England reporting

Building societies' statistical reporting transitioned from the Financial Services Authority to the Bank of England on 1 January 2008, and some minor changes to the calculation of M4 and M4 lending have been implemented. The effects of these have been removed from the flows data, and are small in terms of the amounts outstanding.

Changes to treatment of loan transfers

The treatment of loan transfers was changed from May 2015 to exclude their effects from all measures of net lending and include their effects in all measures of amounts outstanding from January 2010 data onwards. This affected the M4 lending (M4L, which was renamed as ‘M4L (historical measure)’) net lending measures and the ‘M4 lending excluding the effects of securitisations and loan transfers’ (M4Lx, which was renamed as M4L), amounts outstanding measures. As both measures became identical from January 2010 data onwards, the ‘M4L (historical measure)’ ceased after March 2015 data. For more details about this change, see the Statistics article ‘Changes to the treatment of loan transfers and lending to housing associations’.

Changes to AL form

Anecdotal information on banks' intra-group business is available back to 2005 Q1 only. From January 2011, this information is collected more formally as part of Form AL.

Form AL also now includes a separate item for securitisation special purpose vehicles. Prior to January 2011, these formed part of mortgage and housing credit grantors, non-bank credit grantors and other financial intermediaries.

Treatment of securities

We have collected data for monetary financial institutions’ holdings of securities issued by intermediate other financial corporations (IOFCs) and non-intermediate other financial corporations (NIOFCs) since January 2014. We have used these data to improve the calculation of the M4 lending excluding IOFCs measure, as securities issued by IOFCs were previously estimated. For further details, see the Statistics article ‘Improvements to the compilation of M4 lending excluding intermediate OFCs series and the publication of additional monetary financial institutions’ data.

Since February 2014, transfers of quoted shares have been omitted from net securities flow series, bringing their treatment more into line with our approach to transfers of loans. For more details about this change, see the Statistics article ‘Changes to the treatment of securities transactions in the Bank of England’s monetary statistics’.

Break-adjusted M4Lex

Break adjusted quarterly seasonally adjusted levels series for M4Lex are available from the Database.

Further information

Changes to the treatment of securities transactions in the Bank of England’s monetary statistics Strathern, A (2015), Statistics article, May
Changes to the treatment of loan transfers and lending to housing associationsAkhtar, Z and Strathern, A (2015), Bankstats, (Monetary and Financial Statistics), April
Improvements to the compilation of M4 lending excluding intermediate OFCs series and the publication of additional Monetary Financial Institutions’ data, Berar, R and Meader, R (2015), Statistics article, March
Proposed changes to 'lending to individuals' data and some M4 lending series: consultation with users, Akhtar, Z, Bell, S and Owladi, J (2014), Statistics article, September
Seasonal adjustment of M4 excluding intermediate OFCs (M4ex) - an update, Hussain, F and Gilhooly, R (2010), Statistics article November
Measures of M4 and M4 lending excluding intermediate other financial corporations, Janssen, N (2009), Statistics article May
Proposals to modify the measurement of broad money in the United Kingdom: a user consultation, Burgess, S and Janssen, N (2007), Bank of England Quarterly Bulletin

This page was last updated 26 January 2018
Was this page useful?
Add your details...