LONDON: British banks on Tuesday tapped the Bank of England for £3.1 billion ($4.1 billion, 3.7 billion euros) to help bolster their balance sheets in the wake of the shock Brexit vote.
The central bank, which announced the news in a statement, has now injected more than £9.0 billion into lenders in three funding auctions aimed at calming markets around the June 23 referendum date.
It is the first time the BoE has ever held more than one such auction in a month.
In the “Indexed Long-Term Repo” operations, banks, building societies and broker-dealers can offer assets such as mortgage loans to the Bank of England in return for cash, which they repay six months later.
This helps banks and the wider financial industry to keep ticking over during periods of market turbulence or when there might be a risk of a “credit crunch”—a reduction in the availability of loans which can worsen an economic downturn.
Similar emergency lending provided in 2008 during the global financial crisis, and the Bank of England currently holds one Indexed Long-Term Repo a month.
Separately, BoE governor Mark Carney had pledged last Friday to pump at least £250 billion into money markets if needed to prevent a credit crunch amid heightened uncertainty following Britain’s vote to leave the European Union.
Banks in the UK already have a combined £600 billion in liquidity on their balance sheets, helping shield the sector from a repeat of the credit crunch seen at the height of the financial crisis.