Smaller banks likely to tap FLS, says BofA Merrill
UK banks are likely to use the Bank of England’s Funding for Lending Scheme in different ways, depending on their marginal cost of funding and the make-up of their loan portfolios, according to research by Bank of America Merrill Lynch.
But smaller banks will have greater incentive to use the scheme, the analysts reckon.
"For the larger banks with well developed investor bases, sophisticated long term funding strategies and optimal collateral, the FLSs strings may outweigh the FLSs benefits," they wrote.
The main string is the requirement to originate
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