1st Dec 2016 12:33
LONDON (Alliance News) - The Bank of England's new funding scheme to ensure UK banks pass on the effects of low interest rates to borrowers has begun slowly, with just one lender drawing on the funding.
On Thursday, the Bank of England published figures showing that over the period to September 30, the maiden quarterly accounts for the scheme, only Aldermore Group PLC made use of the Term Funding Scheme, drawing GBP70.0 million.
The scheme is designed to provide four-year funding for banks at interest rates close to the Bank of England's own set rate, cut to 0.25% in August, in order to keep banks lending despite the low rate. As the borrowed money is newly-issued by the central bank, it is also a form of quantitative easing.
The scheme has a capacity of GBP100.00 billion, so Aldermore's initial drawdown hasn't made much of a dent. However, the scheme has only been open for drawdown from September 19.
Virgin Money Holdings PLC and OneSavings Bank PLC, two mid-cap lenders, have already said they also intend to make use of the scheme.
By Adam Clark; [email protected]
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