Bank Liabilities Survey - 2017 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 2017

The 2017 Q1 survey was conducted between 20 February 2017 and 10 March 2017.


  • UK banks and building societies reported that total funding volumes had decreased in the three months to mid-March 2017. Within the total, both retail deposit funding and ‘other’ funding — which includes wholesale debt funding, wholesale deposits and funding via central bank operations — were reported to have fallen. However lenders expected total funding volumes to increase significantly in 2017 Q2.
  • Spreads — relative to appropriate reference rates — on both retail deposits and ‘other’ funding were reported to have fallen in 2017 Q1. In Q2, lenders expected ‘other’ funding spreads to increase a little, while retail deposit spreads were expected to remain broadly unchanged.
  • The proportion of wholesale market funding accounted for by long-term instruments was reported to have decreased in Q1, with the proportion of lending raised via covered bonds and, in particular, asset-backed securities having fallen significantly.
  • Investor demand for banks’ wholesale debt was reported to have increased, particularly from UK investors.


  • Lenders reported that their total capital levels increased slightly in 2017 Q1, while their average cost of capital decreased significantly.
  • Changes in balance sheet size, strategic decisions to increase risk and regulatory drivers all contributed positively to lenders’ demand for capital in Q1. Lenders’ reported an increase in demand for total capital from both UK and non-UK investors.

Transfer pricing

  • Lenders reported that the internal price charged to business units to fund the flow of new loans (the ‘transfer’ price) had fallen significantly in Q1. This was attributed to falls in spreads on both retail deposits and wholesale funding — in particular on long-term unsecured wholesale funding (Chart 6). Following three quarters in which the transfer price was reported to have fallen, lenders expect transfer prices to increase in 2017 Q2.

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