Tuesday February 3, 03:31 PM
Bank of England lends banks $264 bln since April
LONDON (AFP) - The Bank (NASDAQ: TBHS - news) of England on Tuesday said Britain's high-street banks had borrowed £185 billion (207 billion euros, $264 billion) since April to help to free up the home-lending market.
The BoE launched its Special Liquidity Scheme (SLS) in April 2008 to allow banks to swap risky mortgage-backed securities for ultra-safe government bonds, aiming to boost liquidity at a time when lending has been hit by the credit crunch.
"Use of the scheme has been considerable, totalling £185 billion of Treasury Bills," the British central bank said in a statement.
"The total nominal value of securities held by the bank as collateral in the scheme amounts to approximately £287 billion."
However, it also estimated that the current real value of these risky mortgage-backed securities had already dropped to £242 billion.
A total of 32 British banks and building societies took part in the Special Liquidity Scheme that lasts for three years and closed for new participants last month.
"Although the drawdown window to access the SLS has closed, the scheme will remain in place for three years, thereby providing participating institutions with continuing liquidity support and certainty," the BoE said.
"Most of the collateral received has been Residential Mortgage-Backed Securities or residential mortgage covered bonds," it added.
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