BOE Term Funding Scheme Q2 Drawings stg75.3bn; Near End Point

By David Robinson

     LONDON (MNI) - Usage of the Bank of England Monetary Policy Committee's

Term Funding Scheme (TFS), which was set up to ensure that banks passed on the

August 2016 Bank Rate cut in full, remained brisk in the second quarter of 2017.

     BOE data showed that drawings at the end of June amounted to stg75.274

billion, up from stg55.78 billion at end Q1. At its August meeting the MPC voted

to close the drawdown period for the TFS at end February, predicting that by

that stage drawings were likely "to slightly exceed stg100bn."

     The Treasury agreed to indemnify an extra stg15 billion of TFS lending in

August.

     The BOE data showed RBS Group has made the heaviest use of the TFS, with

aggregate outstanding drawings of stg14 billion at end Q2, followed by Lloyds

Banking Group with drawings of stg13.5 billion and then Barclays, with stg10

billion. HSBC, unlike other major UK banking groups, has declined to use the

TFS.

     BOE data also showed that outstanding Funding for Lending Scheme(FLS)

drawings, an earlier BOE scheme designed to link cheap central bank funding to

growth in banks aggregate lending to the real economy, stood at stg48.072

billion, down from stg51.059 billion at the end of Q1.

--MNI London Bureau; tel: +44 203-586-2223; email: david.robinson@marketnews.com

[TOPICS: M$B$$$,M$E$$$]