13.6.2011
By Simon Miller
UK banks and building societies have repaid 80% of Special Liquidity Scheme (SLS) loans according to the latest Bank of England quarterly report.
According to the figures, banks have repaid £148bn to SLS by end of May, out of £185bn of UK Treasury Bills that have been lent since drawdown closed at the end of January 2009. In Q1 2011, £94bn had been paid back.
The scheme was set up in April 2008 to improve the liquidity position of the banking system by allowing banks and building societies to swap their high-quality mortgage-backed and other securities for UK Treasury Bills for up to three years.
In order to prevent a refinancing ‘cliff’, the Bank has held bilateral discussions with all users of the Scheme to ensure that there are plans in place to reduce their use of the Scheme in a smooth fashion.
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