Raising finance in traditional bond markets will be more expensive for many banks, and impossible for some, as growing demand for collateral undermines the strength of their balance sheets, a top Bank of England official told the Financial Times.
Andrew Haldane, the director of financial stability at the central bank, said lenders all over the world anticipate that the very, very strong skew towards secured funding in the second half will remain in 2012.
According to the UK central bank, regulators and markets are increasingly concerned over the issue of secured lending to banks, the newspaper said on Monday.
Unsecured creditors might refuse to provide unsecured credit on any terms, the FT quoted Haldane.
(Reporting By Alessandra Prentice; Editing by Kavita Chandran)