BoE working capital facility - ACT Response

We have been impressed by the bank’s willingness, within its risk constraints, to extend the availability of cost competitive credit to UK industry under the asset purchase facilities already in place. The exemplary effect of the Bank’s involvement is potentially important over a period of time.

The credit rating criteria applied to the existing facilities naturally limit their direct effect to investment grade companies. They may however have the effect of releasing bank balance sheets to undertake lending to smaller or weaker credits . The effects of this are likely to be slower and more limited given the general capital pressures on banks, though every little helps.

We welcome the new proposals which may extend the reach of the bank’s direct financing support for UK businesses. We would hope that the potential presence of the Bank in the two new forms of Asset Purchase Facility may, over time, stimulate other investors in this area of activity.