LONDON (MNI) – The Bank of England and Treasury’s joint
Funding for Lending Scheme is picking up pace with the total number of
financial institutions that have signed up rising to 30 from 13 in
late September.
The base lending stock from those institutions rose to stg1.325,555
trillion from stg1.211,736 trillion previously. The potential amounts
involved in the FLS are very large, as banks are able to access up to 5%
of their lending stock, which amounts to stg66.27775 billion on today’s
BOE numbers.
The FLS is the flagship credit easing scheme which opened for
business on August 1 and is set to run for 18 months. It offers
financial institutions funding at well below market rates with
incentives built in for them to expand, or at least maintain, their
stock of lending.
When it was first unveiled the FLS was hit by the news HSBC, the
banking giant, had declined to participate but the other large high
street lenders all came on board and these latest numbers show a raft of
building societies joining.
The BOE is issuing quarterly updates on participation and usage.
These latest figures show participation as at Oct 29 compared to
participation on September 24.
Under current rules, which impose the 5% of lending stock limit,
this creates an upper ceiling on the FLS of some stg80 billion, or 5% of
the estimated total stock of lending outstanding. With HSBC not signing
up, the ceiling is clearly well below this stg80 billion figure.
Some of the BOE Monetary Policy Committee members who have been
skeptical about the case for more quantitative easing, Chief Economist
Spencer Dale and Ben Broadbent, have expressed support for the FLS as a
means of tackling weakness in credit supply, which they believe has hit
the supply side of the UK economy.
-London newsroom: +44 207 862 7491; email: drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$]