Quantitative easing and the Asset Purchase Facility

We purchase financial assets such as gilts and corporate bonds in order to boost economic activity and return inflation to target.

Our asset purchases are carried out through the Asset Purchase Facility, and financed by creating central bank reserves. Transactions are undertaken by a subsidiary of the Bank – the Bank of England Asset Purchase Facility Fund Limited (BEAPFF). 

PDFAsset Purchase Facility Terms and Conditions

PDFAsset Purchase Facility Operating Procedure

Gilt purchases

We purchase short, medium and long-maturity gilts (UK government bonds) in the secondary market, in a process known as quantitative easing.

More detailed data on gilt purchases is available in our Market Notices and time series of operational results:

Market Notice: Asset Purchase Facility gilt purchases

Consolidated Market Notice: Asset Purchase Facility gilt purchase

ExcelGilt purchase operational results

We also have data available on the nominal value of each of the gilts purchased. These are reported on a trade date basis, and updated following any gilt purchase operation:

ExcelGilt purchases in nominal terms

We have agreed that we will make a small proportion of the gilts purchased available to the UK Debt Management Office (DMO) for on-lending to the market through the DMO’s normal repo market activity. We issued a joint statement on this in 2009.

Apply to participate in gilt purchases

To take part in the competitive auctions, you must be:

To take part in the non-competitive element of the auction, you must be appropriately authorised under the Financial Services and Markets Act, or signed up to our gilt-purchase open market operations.

Only one firm within a group can take part in the auctions, unless you undertake different kinds of activity, for example banking and asset management.

To apply, complete the application form and email to applications@bankofengland.co.uk.

Corporate bond purchases

We purchase corporate bonds to stimulate the economy by lowering the yields on corporate bonds. This has the following aims:

  • reducing the cost of borrowing for companies
  • encouraging asset sellers to rebalance their portfolios to include riskier assets
  • encouraging companies to issue more bonds.

The Bank acts as an agent for the Bank of England Asset Purchase Facility Fund (BEAPFF, and only purchases sterling corporate bonds issued by firms that make a material contribution to the UK economy. It participates in the secondary market by holding reverse auctions. However, we reserve the right to carry out purchases via other methods – such as bilateral purchases – if necessary.

Issuer and security eligibility for corporate bond purchases

We have published a list of the sterling corporate bonds we will offer to purchase on behalf of the BEAPFF.

If you have an enquiry about eligible bonds, email eligible.securities@bankofengland.co.uk. Requests to consider additional corporate bonds which are not on the list should include the International Securities Identification Number (ISIN), prospectus or offering circular, pricing supplement or final terms and, if relevant, the guarantee.

Counterparties in the Corporate Bond Purchase Scheme must submit to us an indication of the bonds they would like to sell or take a position in (dealer axes). We have a template for providing this information. You should send your submission to APF_CorporateBond_DealersInfo@bankofengland.co.uk, preferably by close of business on a daily basis, but at least by close of business on the first working day of the week.

Corporate bond sector shares

The Corporate Bond Purchase Scheme started on 27 September 2016. On 27 April 2017, we announced that we had completed the operations necessary to achieve the current target for corporate bond purchases of £10 billion.

To make sure purchases are representative of issuance, we allocated each bond that was eligible for purchase to one of nine sectors, using a common sector classification.  We then made purchases so that our holdings are representative of each sector’s share within the list of eligible bonds.

The table below shows the share for each of the Corporate Bond Purchase Scheme's nine sectors and our holdings in each of these sectors. 

 
Sector
CBPS Holdings as at close of business 3 May 2017
CBPS Target Sector Share
(% portfolio) (% of eligible list)
Electricity 19% 19%
Consumer, Non-cyclical 15% 15%
Communications 12% 12%
Industrial & Transport 13% 13%
Water 11% 12%
Consumer, Cyclical 11% 11%
Gas 8% 8%
Property & Finance 6% 6%
Energy 3% 3%
Total 100% 100%

 

PDFPrevious Corporate Bond Purchase Scheme sector share and holdings results

The operational details of how we carry out corporate bond purchases are contained in the current Corporate Bond Purchase Scheme market notices.

Apply to take part in the Corporate Bond Purchase Scheme

To take part in the Corporate Bond Purchase Scheme, we must be satisfied that you are a market maker in investment-grade sterling denominated corporate bonds. You must also be a participant in the Sterling Monetary Framework for open market operations.

To apply, complete the expression of interest form and email it to applications@bankofengland.co.uk or call +44 (0) 20 3461 6327 / +44 (0)20 3461 5928. You also need to complete the operation contacts and settlement information form and send it to BPFRDMarketSettlement@bankofengland.co.uk.

If your application is successful, you will have to sign an Admission Letter agreeing to the terms and conditions.

How are gilt and corporate bond purchases carried out?

Our electronic tendering system, Btender, is used to carry out all gilt and corporate bond auctions.  All counterparties must use Btender. You will also require access to SWIFTnet.

PDFUser guide for Btender

PDFBtender quick reference guide

Term Funding Scheme

Our Term Funding Scheme (TFS) provides funding to banks and building societies at rates close to Bank Rate. It is designed to encourage them to reflect cuts in Bank Rate in the interest rates faced by households and businesses. It also encourages them to lend by providing a cost-effective source of funding. It is a monetary policy tool of the Monetary Policy Committee and is operated as part of the Asset Purchase Facility.

The TFS allows firms to borrow central bank reserves in exchange for eligible collateral. It is open to firms that take part in the Sterling Monetary Framework and signed up to our Discount Window Facility.

The Term Funding Scheme is open to drawdowns from 19 September 2016 to 28 February 2018.

The operational details of how we operate the Term Funding Scheme are contained in the Term Funding Scheme Market Notice.

Term Funding Scheme usage and lending data

We publish quarterly data showing, for each group participating in the TFS, the amount borrowed from the scheme and the net quarterly flows of lending to UK households and firms.

The provisional publication dates are:

  • 1 March 2018
TFS Group Certified lending to UK households, PNFCs and NBCPs (£mn) Aggregate outstanding TFS drawings as at 30/09/2017 (£mn)
Base Stock of loans as at 30/06/16 Q3 2017 net lending flow Cumulative net lending since 30/06/16
TOTAL 1,491,489 14,513 60,390 84,989
AIB Group (UK) 6,338 -66 -8 -
Aldermore 6,764 256 1,519 1,396
Arbuthnot Latham 577 33 166 53
Atom Bank - 433 703 -
Bank of Ireland 25,555 -243 -759 1,100
Barclays 210,867 1,528 2,807 10,000
Buckinghamshire Building Society 168 7 17 10
Cambridge Building Society 919 9 126 15
Charter Court Financial Services 2,799 392 2,275 878
Close Brothers 4,916 119 320 265
Clydesdale 29,494 705 2,088 1,900
Coventry Building Society 31,406 922 3,978 1,500
Cumberland Building Society 1,775 47 178 25
Dudley Building Society 271 15 31 14
FirstRand Bank 2,491 115 662 -
Furness Building Society 684 17 68 45
Hampshire Trust Bank 289 46 306 20
Hinckley & Rugby Building Society 500 19 108 93
Holmesdale Building Society 131 -1 10 4
ICICI Bank 214 30 102 8
Investec Bank 3,667 150 170 -
Ipswich Building Society 399 12 51 20
Julian Hodge Bank 622 14 80 -
Leeds Building Society 12,132 373 2,381 850
Leek United Building Society 701 24 79 60
Lloyds Banking Group 398,534 1,383 -5,549 18,000
Mansfield Building Society 257 18 29 10
Market Harborough Building Society 360 9 18 -
Marsden Building Society 297 11 - 10
Melton Mowbray Building Society 330 - 24 12
Metro Bank 4,576 669 3,092 2,123
Monmouthshire Building Society 799 1 8 34
National Counties Building Society 1,163 45 225 100
Nationwide Building Society 181,238 1,277 8,497 9,450
Newbury Building Society 762 8 79 10
Newcastle Building Society 2,485 37 199 171
Nottingham Building Society 2,909 70 380 395
OakNorth Bank 78 84 358 1
OneSavings Bank 4,923 412 1,525 801
Paragon Bank 10,598 63 340 700
Principality Building Society 6,902 233 697 400
RBS Group 214,889 1,827 15,114 14,000
Saffron Building Society 814 9 -50 -
Sainsbury's Bank 3,555 230 1,118 300
Santander 188,725 -308 149 8,500
Secure Trust Bank 1,103 62 415 98
Shawbrook Bank 3,458 198 734 560
Skipton Building Society 13,739 44 1,508 1,050
Teachers Building Society 212 5 16 17
Tesco Bank 9,070 496 2,109 939
TSB Bank 27,876 796 5,028 4,555
Virgin Money 29,598 1,210 5,991 4,186
West Bromwich Building Society 4,779 113 186 312
Yorkshire Building Society 33,778 554 695 -

The data include all TFS groups that have been admitted to the scheme and have had their base stock of loans as at 30 June 2016 verified by the Bank of England.

More detailed data and data for the previous quarter are also available.

Note that data may not sum to the total due to rounding. Data may be subject to revisions.

Apply to take part in the Term Funding Scheme

To apply to take part in the Term Funding Scheme, fill out the application form. For inquiries email applications@bankofengland.co.uk or call +44 (0) 20 3461 6327 / +44 (0) 20 3461 5928.

At the end of the application process, you will receive a Scheme Letter, which must be signed by an authorised signatory and returned to us.

UK branches of banks incorporated overseas will be required to provide a legal capacity opinion on their letter, and may also be asked to provide a country opinion. 

WordPro forma legal opinion (capacity issues only)

WordPro forma legal opinion (country and capacity issues)

If you are not the primary entity in your group, a guarantee and – for guarantors incorporated outside the UK – an associated legal opinion may be required. These must follow standard pro-forma, available below:

WordPro forma guarantee

WordPro forma legal opinion on the guarantee

Withdrawn schemes

Information about previous Asset Purchase Facility Schemes can be found on the National Archives website.

The National Archives

This page was last updated 14 December 2017
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