UK banks and building societies will ll have to pay more than £800m in additional interest costs after the Bank of England brought an end to six years of cheap funding schemes, with small and mid-sized lenders the most severely-affected, according to a new report to be published on Wednesday.
Moody’s, the credit rating agency, said banks will have to increase customer deposits 30% more quickly than the historical average rate in order to compensate for the loss of the BoE’s Term Funding and Funding for Lending schemes.
The Funding for Lending Scheme was introduced in 2012 to encourage banks to make more credit available after the financial crisis, and was largely replaced by the Term Funding Scheme after the Brexit vote.
