Bank of England injects UK banking system with £3.1bn of funding after Brexit

Lenders have taken more than £9 bn from the central bank in June

Zlata Rodionova@zlata07
Tuesday 28 June 2016 17:18
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The £3.1 billion released on Tuesday was the last of the extra auctions announced by the Bank of England in March this year
The £3.1 billion released on Tuesday was the last of the extra auctions announced by the Bank of England in March this year

The Bank of England has injected £3.1 billion into the UK banking system.

Three special auctions, where the Bank of England makes extra funds available to banks, were planned around the EU referendum to shore up the financial system.

The £3.1 billion released on Tuesday was the last of the extra auctions announced by the Bank of England in March this year.

Lenders have taken more than £9 billion from the central bank in June.

The special funding was described as a “precautionary measure” to make banks they have the necessary cash to cope with any turmoil caused by the referendum.

The Bank allotted £3 billion to lenders but received bids totalling £6.3 billion.

It has already injected £2.5 billion in its first auction on June 14 and £317 million in the second auction on June 28.

Mark Carney, governor of the Bank of England, declared that the central bank is ready to provide an extra £250 billion through its existing facilities on Friday. He sought to reassure investors saying the UK is “well prepared” for the event.

His comments followed Prime Minister David Cameron’s announcement that he will step down later this year.

Confirmation that the UK has voted to end its 43-year membership of the EU sent sterling down to a three-decade low on Friday morning.

The FTSE 100 plunged more than 8 per cent on opening in its biggest slump since the 2008 financial crisis, wiping £120 billion off the value of the 100 biggest UK companies.

Brexit wiped a record $3 trillion off global markets in two days, according to data compiled by Standard & Poor's Dow Jones Indices.

But markets pressure eased on Tuesday with the FTSE closing higher at 6,140.39 points.

The FTSE 250 - seen as a better indicator of UK businesses - closed at 15,503.06 - a rise of 3.58 per cent.

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