BOE Made `Tacit Agreement' on Bank Support, Sunday Times Says

BOE Made `Tacit Agreement' on Bank Support, Sunday Times Says

March 23 (Bloomberg) -- Bank of England Governor Mervyn King made a ``tacit agreement'' at a meeting last week with British lenders to provide bigger liquidity injections and accept a wider range of collateral to back loans, the Sunday Times said, without saying where it got the information.

King gave no precise commitments to U.K. banking executives when they met last week, the newspaper reported. He also didn't satisfy lenders' demands for an overhaul of the way the Bank of England provides emergency funding, the Sunday Times said. A spokesman for the Bank of England, who wouldn't be named, declined to comment on the report when contacted by Bloomberg.

King promised to try to limit the stigma attached to borrowing from the Bank of England, the newspaper said.

The governor also made it clear that while he has a duty to protect the financial system, his role does not stretch to propping up banks' profitability, the newspaper reported.

The Bank of England said yesterday it is ``not among'' central banks that the Financial Times said were contemplating the purchase of mortgage-backed securities to smooth lending to consumers after a worldwide surge in borrowing costs. The Federal Reserve also denied it was in discussions to buy such debt.

BLOOMBERG