Monday 3rd September 2007
The Bank of England lent £1.6 billion to Barclays on Wednesday, August 29th, it has been revealed.
Barclays has now accessed the central banks standing facility twice in the space of the month, reports the Press Association (PA).
However, the banking group stressed that the latest loan was only necessitated by a technical glitch and not by an overall lack of funds.
"Had there not been a technical breakdown, this situation would not have occurred," Barclays asserted, according to the PA.
"There are no liquidity issues in UK markets - Barclays itself is flush with liquidity."
About 14 such loans have now been provided to banks since the start of 2007, the PA adds.
The two obtained by Barclays in August have been a last-minute attempt to meet the 16:20 deadline by which all banks must show overall liquidity.
If funds cannot be obtained from another financial institution, the central bank provides an overnight loan at a penalty interest rate of one per cent greater than the base rate at the time.
Previously the financial services provider was forced to turn to the Bank of England after a loan from fellow bank HSBC could not be processed in time, the PA claims.
And this time the electronic glitch was recognised too late for funds to be acquired from another bank - prompting the call to the Bank of England.
Simon Maughan, analyst at MF Global, told Reuters of the need to retain perspective in light of the news.
"When there is an absence of information, people jump all over whatever there is to try and draw conclusions," he suggested.
"The Bank of Englands liquidity window is ignored 95 per cent of the time. I dont think it is right to jump up and down and make a big thing about it right now."
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