Bank Liabilities Survey - 2016 Q2

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 July 2016

The 2016 Q2 survey was conducted between 23 May 2016 and 10 June 2016.


  • UK banks and building societies reported that their total funding volumes were broadly unchanged in the three months to mid-June 2016. Within the total, lenders reported that retail deposit funding had increased, while ‘other’ funding, which includes wholesale debt funding and wholesale deposits, had decreased. Lenders expected total funding volumes to increase slightly in 2016 Q3.
  • Spreads — relative to appropriate reference rates — on ‘other’ funding were reported to have increased in the three months to mid-June. Lenders reported that spreads on retail deposits had narrowed in Q2.
  • Lenders reported that the supply of deposits from households had pushed up the volume of deposits raised slightly in 2016 Q2, but supply was expected to be unchanged in Q3. The supply of deposits from private non-financial corporations was broadly unchanged in Q2, and was expected to be little changed in Q3 also.
  • The proportion of wholesale market funding accounted for by long-term instruments increased slightly in Q2, with regulatory drivers and changes to balance sheet size contributing to lenders’ demand for long-term wholesale funding.
  • Investor demand for banks’ wholesale debt fell significantly in 2016 Q2.


  • Lenders reported that their total capital levels increased in 2016 Q2. Lenders also reported that their average cost of capital decreased slightly in 2016 Q2.
  • Changes in balance sheet size pushed up lenders’ demand for capital in Q2. Strategic decisions to increase risk and changes in the riskiness of assets also pushed up demand for capital slightly, while market conditions had pushed down for the second consecutive quarter.

Transfer pricing

  • Lenders reported that the internal price charged to business units to find the flow of new loans (the ‘transfer price’) increased slightly in 2016 Q2. Factors affecting transfer prices were mixed, with lenders reporting that swaps and, to a lesser extent, long-term secured wholesale funding spreads had pushed up transfer prices, while long-term unsecured spreads had pushed down.

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