Over subscription suggests banks are struggling

Mar 21 2008 by Bill Gleeson, Liverpool Daily Post

THE Bank of England yesterday pumped another £5bn into money markets as it met the bosses of Britain’s biggest banks in a bid to beat the credit crunch.

Yesterday’s money auction, which followed a £5bn cash injection on Monday, was nearly three times over-subscribed, suggesting banks were increasingly struggling to secure funding in wholesale markets.

And reports indicated that high street lenders would press the Bank’s Governor, Mervyn King, for more funding in today’s scheduled meeting.

The Bank's ”exceptional fine-tuning'' operation on Monday - prompted by the crisis at US investment bank Bear Stearns was also oversubscribed, almost five-fold.

The Bank said yesterday that it would keep re-offering the overnight money “for the remainder of the maintenance period”.

Rumours have been mounting over the funding position of major banks, with Halifax Bank of Scotland’s shares hammered yesterday after becoming the victim of false market rumours, which sparked denials from bosses and the Bank of England.

It also emerged yesterday that two mortgage lenders have pulled nearly their entire mortgage ranges from the market.

They have withdrawn all of their home loans, except their standard variable rates.