Prior to 16 September 1971, the London Clearing Banks maintained interest rate agreements in that they charged the same minimum rates on advances to industrial and commercial companies and paid the same rates on deposits. Both rates were linked to Bank Rate with the rate on advances at a fixed margin above Bank Rate and the deposit rates (normally 7 days) at a fixed 2% below.
With the introduction of Minimum Lending Rate (MLR) on 13 October 1972 and the ending of this agreement, the London Clearing Banks generally linked their base rates to MLR. However, with the introduction of Band 1 dealing rates on 20 August 1981 , their individually declared base rates moved more flexibly in response to market developments because the Bank of England’s "stop" rate in its open market operations was no longer published. A consequence of this was a more flexible market-related pricing of overdraft facilities. However, the final lifting of the clearing banks lending ceilings saw a surge in the use of the interbank market to finance lending at rates closely related to money-market rates, which vary daily.