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Bank Claims: UK banks must fill £390m funding gap

UK banks will need to replace around £390 million of income next year as maturing bonds and the withdrawal of grants hits firms.

Financial analysts Nomura warned of the impending funding constraints during a presentation yesterday (July 20th), reports The Telegraph.

Robert Law, co-head of banking research at Nomura, claimed maturing bonds, which were taken out during the financial crisis, will leave a significant hole in bank's revenue.

He told the news provider: "Lloyds and RBS are undertaking substantial medium-term restructuring of their balance sheets.

"In our view, this restructuring is partly aimed at managing their refinancing requirements, as well as reducing wholesale funding an particularly the proportion of short-term financing within that."

Around £200 billion worth of maturing bonds and mortgage securities will need to be refinanced.

The withdrawal of government grants account for the remaining £190 billion of the funding black hole.

The Special Liquidity Scheme, which allows firms to trade mortgage securities for treasury bills, will stop in 2012.

Posted by Jennifer Haines

Jennifer's speciality knowledge is credit card changes and balance transfers ADNFCR-2776-ID-800003955-ADNFCR

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