Bank Liabilities Survey - 2017 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 2017

The 2017 Q2 survey was conducted between 22 May 2017 and 9 June 2017. 


  • UK banks and building societies reported that their total funding volumes increased in the three months to mid-June 2017. Within the total, both retail deposit funding and ‘other’ funding volumes — which includes wholesale debt funding, wholesale deposits and funding via central bank operations — were reported to have increased (Chart 1). Lenders expected total funding volumes to increase significantly in 2017 Q3.
  • Spreads — relative to appropriate reference rates — on retail deposits were reported to have increased slightly in Q2, while spreads on ‘other’ funding had fallen significantly (Chart 2). Lenders expected retail deposit and ‘other’ funding spreads to increase a little in Q3.
  • The proportion of wholesale market funding accounted for by long-term instruments was reported to have remained broadly unchanged in Q2, while lenders expected funding from long-term instruments to increase significantly in Q3.
  • Investor demand for banks’ wholesale debt was reported to have increased slightly in Q2, with insurance companies and pension funds having been the largest sources of this increase. Lenders expected investor demand for wholesale debt to increase further in Q3 (Chart 3).


  • Lenders reported that their total capital levels increased significantly in Q2, and they expected a further significant increase in Q3 (Chart 4). The effect of profits, losses, deductions and charges was reported to have pushed up directly and significantly on total capital in Q2, while changes in the economic outlook and the riskiness of assets pushed up slightly on lenders’ demand for capital.
  • The average cost of capital was reported to have fallen slightly in Q2, but this was expected to reverse in Q3.

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 Q2, a continuation of the falls reported in recent quarters (Chart 5). Significant falls in the spreads on both short-term and long-term wholesale funding were reported to be the main drivers of this decline (Chart 6). Lenders expect a further slight fall in the transfer price in Q3.

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