Exclusive: Big banks shoot down Carney’s £90bn loan plan

Tim Wallace
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THE BIGGEST four banks do not intend to run down their liquidity buffers to increase lending, City A.M. understands, despite Bank of England boss Mark Carney this week cutting the size of the buffers of liquid assets they must hold.

The governor believes this could free up £90bn to lend out.

However major lenders are expected to spurn the offer.

The big four banks declined to comment, but it is thought Lloyds wants to use its liquidity buffers to show it has recovered, inspiring confidence in investors. And while Barclays is reallocating some of its buffer to use resources more efficiently, that change is nowhere near the scale Carney envisages.

RBS has previously made clear it has £20bn of excess corporate deposits it wants to lend out, but cannot find enough creditworthy borrowers. And HSBC has long been proud of its strong, deposit-funded liquidity position.

However industry insiders were surprised at the reluctance to use this breathing space, as banks have long complained of the strain of the buffers imposed by regulators.