{"id":1182638,"date":"2026-09-02T14:49:14","date_gmt":"2026-09-02T14:49:14","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/1182638\/"},"modified":"2026-09-02T14:49:14","modified_gmt":"2026-09-02T14:49:14","slug":"british-banks-increasingly-using-higher-risk-assets-as-colla","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/1182638\/","title":{"rendered":"British Banks Increasingly Using Higher-Risk Assets as Colla\u2026"},"content":{"rendered":"

U.K. banks are increasingly using higher-risk assets as collateral with the\u00a0Bank of England<\/a>.<\/p>\n

That\u2019s according to a\u00a0report<\/a>\u00a0Wednesday (Sept. 2) from Reuters, citing its own review of filings at the British central bank.<\/p>\n

On August 18, banks pledged $2.56 billion worth of the Bank of England\u2019s highest-risk type of collateral \u2014 things like\u00a0store cards<\/a>\u00a0and vehicle leases \u2014 at the bank\u2019s weekly auction for six-month funds. That\u2019s the most since March 2020 and three times as much as the prior week, Reuters said.<\/p>\n

The news outlet said its calculations show the BoE has about $24 billion of what it calls \u201cLevel C\u201d collateral on its books from its Indexed Long-Term Repo (ILTR), up from $11.7 billion a year ago and less than $1.3 billion in mid-2024.<\/p>\n

According to Reuters, these transactions show the extent to which the Bank of England is exposed to higher-risk and potentially illiquid assets at a time when the\u00a0European Central Bank<\/a>\u00a0has imposed stricter criteria for what it accepts as collateral.<\/p>\n

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A BoE spokesperson told Reuters the ILTR was designed to allow banks use a range of assets as collateral while letting the central bank protect itself via what it called robust risk management.<\/p>\n

Reuters says its analysis of the Bank of England\u2019s Level C collateral list showed that the bank accepts a range of products in categories that the ECB has no longer allowed under its stricter rules, including several debt products tied to the future payments on homeowners\u2019 mortgages.<\/p>\n

The securitization of mortgage-backed debt and other loans was a key cause of the 2008 financial crisis, the report added<\/p>\n

\u201cThe BoE has got good reasons for wanting to buy grade C assets but there\u2019s a risk that if they do too much then that can encourage bad lending,\u201d said\u00a0William Allen<\/a>, a visiting fellow at the\u00a0National Institute of Economic and Social Research<\/a> and a former head of the Bank of England\u2019s money markets division. \u201cI think they probably understand that already.\u201d<\/p>\n

In other lending news, recent PYMNTS Intelligence research finds that fast-growing\u00a0middle-market firms<\/a>\u00a0aren\u2019t always losing opportunities because lenders turned them down. In many cases, it\u2019s because available credit can\u2019t arrive enough to be useful.<\/p>\n

That gap is the center of the PYMNTS Intelligence\u2019s\u00a0\u201cThe Emerging Middle Market: When Credit for Fast-Growing Companies Isn\u2019t Really \u2018Credit,\u2019\u201d\u00a0<\/a>which finds 85% of accelerating larger companies say they have enough or more than enough credit.<\/p>\n

\u201cYet 46% frequently or very frequently\u00a0miss growth opportunities<\/a>\u00a0because they lack the credit to act, nearly three times the share of established larger firms,\u201d PYMNTS wrote.<\/p>\n","protected":false},"excerpt":{"rendered":"U.K. banks are increasingly using higher-risk assets as collateral with the\u00a0Bank of England. That\u2019s according to a\u00a0report\u00a0Wednesday (Sept.…\n","protected":false},"author":2,"featured_media":1182639,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[5018,3,4],"tags":[936,3427,748,393,4884,49851,12,1144,3279,712,16,15,1764,3281],"class_list":["post-1182638","post","type-post","status-publish","format-standard","has-post-thumbnail","category-britain","category-uk","category-united-kingdom","tag-bank-of-england","tag-banking","tag-britain","tag-england","tag-great-britain","tag-loans","tag-news","tag-northern-ireland","tag-pymnts-news","tag-scotland","tag-uk","tag-united-kingdom","tag-wales","tag-whats-hot"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/117202006455117094","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1182638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=1182638"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/1182638\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/1182639"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=1182638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=1182638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=1182638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}