Financial institutions

From losses to buffer - calibrating the positive neutral CCyB rate in the euro area

06/11/2025 European Central Bank Central banks

We study the impact of cyclical systemic risks on banks’ profitability in the euro area within a panel quantile regression model, with the ultimate goal to inform the calibration of the Countercyclical Capital buffer (CCyB). Compared to previous studies, we augment our model to control for unobserved bank-specific characteristics and year-fixed effects and find a lower degree of heterogeneity in the estimated effects across the conditional distribution of bank returns on assets.

Organized crime and banks: assessing the effects of anti-mafia police actions on lending

06/11/2025 European Central Bank Central banks

This study examines how dismantling Mafia-connected firms affects banks’ lending practices. Using a unique dataset of 667 such firms and loan-level data from the European Central Bank, our analysis shows that anti-Mafia operations precede an increase in bank loans to businesses that operate in areas that are directly affected by these actions. Specifically, overall loan volumes increase by approximately 0.8 percent, which translates to an increase of €1.38 billion in bank loans to these firms.

Recalibration of the Indexed Long-Term Repo Operation – Market Notice 11 June 2025

06/11/2025 Bank of England Central banks

This Market Notice confirms the recalibrated parameters of the Indexed Long-Term Repo (ILTR) operation. In line with the Bank’s transition to a repo-led, demand driven operational framework for providing reserves, which ILTR operations are central to, the Bank is announcing an increase in the total amount of reserves available in each ILTR auction, an increase in the quantity of reserves available at fixed minimum spreads, and a gentler upward sloping supply curve than previously to ensure that clearing spreads only rise gradually.

Private safe asset supply and financial instability

05/27/2025 European Central Bank Central banks

This article studies the supply of private safe assets by banks and its implications for financial stability. Banks originate loans and improve loan quality through hidden screening efforts. They can then create safe assets by issuing debt backed by the safe payoffs, from both loans they have originated and a diversified pool of loans from other banks. The interaction between banks’ screening efforts and diversification decisions determines the volume of safe assets they supply.

Statistical Notice 2025/03 - Bank of England Levy: request for contact details

05/22/2025 Bank of England Central banks

Statistical Notices update the definitions and guidance contained in the Banking Statistics Yellow Folder

Pricing or panicking? Commercial real estate markets and climate change

05/21/2025 European Central Bank Central banks

This paper provides the first study of climate risk pricing in euro area commercial real estate markets. We pay particular attention to changes in risk pricing over time, as a sudden market shift may significantly amplify the financial stability and macroeconomic implications of these risks. We find evidence of investors applying a penalty to buildings exposed to physical risk and that this penalty has increased significantly over the 2007-2023 period we study, particularly for properties exposed to risks associated with climate change.

Delays to changes to country groupings for International Banking Statistics

05/21/2025 Bank of England Central banks

This article provides an update regarding the timeline of implementing changes for country grouping conventions used in statistics covering the international business of monetary financial institutions operating in the UK and the consolidated claims of UK headquartered monetary financial institutions.

The poor, the rich, and the credit channel of monetary policy

05/20/2025 European Central Bank Central banks

Monetary policy can have contrasting effects on economic inequality via distinct channels. We examine the effect working via the credit channel, whereby monetary policy induces heterogeneous access to credit for business owners based on their wealth. Using unique data on business loan applications from small firms, we find that monetary expansions increase the bank’s likelihood to approve loan applications, particularly so for low-wealth entrepreneurs, translating to higher future income and wealth.

The impact of monetary policy and macroprudential policy on corporate lending rates in the Euro area

05/20/2025 European Central Bank Central banks

We examine the differential impact of monetary policy and macroprudential policy on bank lending rates in the euro area, using granular corporate loan-level data for the period 2019-2023. We find three results: First, consistent with the predictions of a stylized theoretical model of bank lending rates, monetary policy exerts an order of magnitude larger impact on lending rates than macroprudential policy. Second, the effectiveness of monetary policy transmission weakens when interest rates are close to or below zero.

Updates to the PRA’s approach of responsible openness to international banks

05/20/2025 Bank of England Central banks

The PRA has today clarified its expectations around business conducted within branches of international banks operating in the UK, as well as its booking model expectations and liquidity reporting for such branches.

Financial institutions

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