None of the nation’s banks and building societies showed any interest in borrowing from the £10billion pot the BoE had made ready.
A first in the history of the Bank, it was offering funds up to help ease the strain currently experienced by the UK’s financial markets, lent at what was considered to be a steep rate of 6.75 per cent
Since the Bank made the announcement last week the inter-bank LIBOR rates have fallen – cited as a possible reason pushing financial institutions to back off from the auction as it made Bank rates look overly expensive.
There was also a concern that those banks and building societies who put a bid in for the funds would be identified as struggling, potentially turning them into a form of pariah in the same way as Northern Rock who are currently searching for a buyer.
Offering funding in this way was seen as a u-turn on the part of BoE governor Mervyn King – who faced tough questioning following the decision last week.
