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High Street Banks looking for almost twice as much as the £50 billion offered by BoE
Britain's biggest banks are preparing to swap between £80 billion and £90 billion of mortgage-backed assets for Bank of England Treasury bills, nearly twice what the central bank envisaged when it unveiled its scheme to unblock the frozen bank-lending market, the Financial Times reported today.
Citing debt market sources, the newspaper said banks have approached credit rating agencies about how to structure deals that will receive the triple A rating required for securities that lenders want to swap for Treasury bills that can then be used to raise cash.
The move comes amid signs that lending in the interbank market is becoming particularly tight for banks that cannot post collateral to ensure their debt will be repaid, the newspaper said.
When the Bank of England set up the special liquidity scheme three weeks ago, it set the level of funds available at £50 billion after discussions with banks about the extent to which they are having difficulty raising cash for unsecured borrowing.However, it hinted it could increase that amount if needed, the FT said.
Citing debt market sources, the newspaper said banks have approached credit rating agencies about how to structure deals that will receive the triple A rating required for securities that lenders want to swap for Treasury bills that can then be used to raise cash.
The move comes amid signs that lending in the interbank market is becoming particularly tight for banks that cannot post collateral to ensure their debt will be repaid, the newspaper said.
When the Bank of England set up the special liquidity scheme three weeks ago, it set the level of funds available at £50 billion after discussions with banks about the extent to which they are having difficulty raising cash for unsecured borrowing.However, it hinted it could increase that amount if needed, the FT said.
Fri, 16th May 2008