Bank Liabilities Survey - 2016 Q1

This quarterly survey of banks and building societies is aimed at improving our understanding of the role of lenders’ liabilities and capital in driving credit and monetary conditions.
Published on 13 April 2016

The 2016 Q1 survey was conducted between 22 February 2016 and 11 March 2016.


  • UK banks and building societies reported that their total funding volumes had increased significantly in the three months to mid-March 2016. Within the total, lenders reported that retail deposit funding had stayed unchanged, while ‘other’ funding, which includes wholesale debt funding and wholesale deposits, had increased significantly. Lenders expected total funding volumes to increase slightly in 2016 Q2.
  • Spreads — relative to appropriate reference rates — on ‘other’ funding were reported to have increased in 2016 Q1, and were expected to increase again next quarter. Lenders reported that spreads on retail deposits had narrowed significantly, and expected them to be unchanged in 2016 Q2.
  • Lenders reported that the supply of deposits from households had pushed up the volume of deposits raised slightly in 2016 Q1, but was expected to be unchanged in Q2. The supply of deposits from private non-financial corporations was unchanged in Q1, and was expected to be unchanged in Q2 also.
  • The proportion of wholesale market funding accounted for by long-term instruments increased significantly in Q1, with regulatory drivers, as well as price and non-price terms, contributing to lenders’ demand for long-term wholesale funding.
    The proportion of long-term instruments was anticipated to increase significantly once more in Q2.
  • Investor demand for wholesale debt fell significantly in 2016 Q1 for the first time since the survey began in 2012 Q4.


  • Lenders reported that their total capital levels decreased in 2016 Q1, having increased in most quarters since the survey began. Capital levels are expected to remain unchanged in Q2. Lenders also reported that their average cost of capital increased significantly in 2016 Q1, but that was expected to decrease in Q2.
  • Having pushed up lenders’ demand for capital in previous quarters, regulatory drivers were not reported to have affected lenders’ demand for capital in Q1. Changes in balance sheet size pushed up lenders’ demand for capital significantly, while changes in riskiness of assets decreased demand.
  • Strategic decisions to change the mix of capital were reported to have pushed up the proportion of capital accounted for by Tier 1 and Tier 2 capital instruments, but market conditions, a changing economic outlook and, in particular, investor demand had pushed down.

Transfer pricing

  • Lenders reported that the internal price charged to business units to fund the flow of new loans (the ‘transfer price’) increased in 2016 Q1, driven by significantly higher long-term wholesale funding spreads. Lenders reported that swaps or other reference rates had pushed ‘transfer prices’ downwards significantly. Lenders expected the ‘transfer price’ to be unchanged in 2016 Q2.

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