Banks hunt for asset-backed securities as liquidity swap market stagnates

liquidity ratio

Banks are sourcing illiquid assets from other financial institutions to use as collateral for liquidity swaps with insurers.

Lloyds Banking Group is one of a number of banks that are looking to third-party assets to meet demand from insurance companies that are keen to undertake liquidity swaps as a way to increase the yield on their liquid assets.

The volume of liquidity swaps has fallen over the past year as the supply of suitable illiquid bank assets has lessened and the need for banks to und