In several other countries, securitisations were also placed directly with investors again, although those volumes considerably lagged the level of the years preceding the credit crisis. But again much securitisation took place for liquidity purposes. In those cases, banks do not sell on securitisations in the market but keep them in their own portfolios. Those securitisations that were traded had a low risk profile.
In securitisation, loans - in particular from banks - to households and companies are bundled and packaged, and sold as marketable securities. Securitisations form an additional source of funding for banks, which may provide leeway for further lending, and at the same time spread credit risks over several investors in the market.
Before the credit crisis, securitisations really took off, but after it started, investors no longer trusted securitised loans. Reasons for this were the problems that had arisen with securitisation of many risky (subprime) US residential mortgages, complex securitisation structures and the fact that ratings from credit rating agencies were not always reliable. Securitisation of qualitatively good loans (prime) also suffered from this negative sentiment, causing the worldwide market for securitisations to dry up. Since then, securitisations were mainly made for liquidity purposes, at any rate in Europe. Banks hold these securitisations in their own portfolios, so that they can use it as collateral for obtaining liquidity from central banks.