Direct lending and Notional pooling: Difference between pages

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Direct lending is when a non-bank lender (usually an insurance company or an investment firm) lends directly to ultimate borrowing companies rather than doing so via a bank or a hedge fund.  
''Banking''.


Funds dedicated to direct lending have increased as this type of lending has often been looked down upon by banks.  
The technique used by banks for calculating interest on balances in a notional cash pool.  


For example, Lawrence Delevingne writing for Reuters<ref>[https://www.reuters.com/article/us-usa-funds-lending/direct-lending-funds-fading-all-weather-appeal-idUSKBN1A90CJ] ''www.reuters.com''</ref> (24 July 2017) says "direct lenders make high-interest rate loans, usually to fledgling or struggling businesses passed over by banks".  
Excess funds in the accounts of a company or its subsidiaries are used to offset deficits in other company accounts for the purpose of determining interest earned or owed.  


However, as banks struggled to lend to smaller companies following new capital requirements following the global financial crisis starting in 2007/8 and the eurozone crisis starting in 2009, direct lending has grown and some banks themselves started conducting some of their corporate lending via direct-lending funds.
Notional pooling is also referred to as interest offset pooling.




== See also==
== See also ==
* [[Bank Facility]]
* [[Cash pool]]
* [[Facility]]
* [[CertICM]]
* [[Cross-guarantees]]
* [[Interest rate enhancement]]


==Other links==
[https://www.ft.com/content/ca61614a-aecc-11e7-beba-5521c713abf4 US direct lending fund raises $4.5bn (FT October 12 2017]
[https://www.ft.com/content/7432311a-add6-11e7-aab9-abaa44b1e130 Gillian Tett on growth of direct lending and its implications (FT October 12 2017)]
==References==
<references/>
[[Category:The_business_context]]
[[Category:Long_term_funding]]
[[Category:Long_term_funding]]
[[Category:Cash_management]]

Revision as of 08:14, 29 November 2014

Banking.

The technique used by banks for calculating interest on balances in a notional cash pool.

Excess funds in the accounts of a company or its subsidiaries are used to offset deficits in other company accounts for the purpose of determining interest earned or owed.

Notional pooling is also referred to as interest offset pooling.


See also

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