Bank Liabilities Survey - 2017 Q3

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 12 October 2017

The 2017 Q3 survey was conducted between 21 August 2017 and 8 September 2017.


  • UK banks and building societies reported that their total funding volumes increased in the three months to mid-September 2017. Within the total, retail deposit funding was reported to have remained unchanged, while ‘other’ funding — which includes wholesale debt funding, wholesale deposits and funding via central bank operations — was reported to have increased significantly (Chart 1). Lenders expected total funding volumes to increase significantly in 2017 Q4, again driven by ‘other’ funding.
  • Spreads — relative to appropriate reference rates — on retail deposits were reported to have increased in Q3, while spreads on ‘other’ funding had fallen slightly (Chart 2). Lenders expected retail deposit funding spreads to decrease a little in Q4, while spreads on ‘other’ funding were expected to remain broadly unchanged.
  • Lenders reported that the supply of deposits from households had pushed down on the volume of deposits raised in Q3, while the supply of deposits from private non-financial corporates had pushed up on this (Chart 3). 
  • The proportion of wholesale market funding accounted for by long-term instruments was reported to have decreased slightly in Q3, but was expected to increase significantly in Q4. A variety of factors was reported to be pushing up on demand for both short-term and long-term wholesale debt, including the price/yield of instruments.
  • Investor demand for lenders’ wholesale debt was reported to have increased in Q3, with hedge funds and other asset managers having been the largest sources of this increase. Lenders expected investor demand for wholesale debt to remain broadly unchanged in Q4.


  • Lenders reported that their total capital levels increased in Q3 (Chart 4). They expected a further significant increase in Q4, when regulatory drivers and changes in balance sheet size were both expected to push up on demand for capital.
  • The average cost of capital was reported to have fallen significantly in Q3, but was expected to increase slightly in Q4.

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 Q3, a continuation of the falls reported in recent quarters (Chart 5). Decreases in the spreads on both short-term and long-term wholesale debt funding were reported to be the main drivers of this decline (Chart 6). Lenders expected a further slight fall in the transfer price in Q4.

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