UK banks’ holdings of leveraged loans are “very small”, despite a deterioration in lending standards, the Bank of England says in its 2018 stress test results.
Leveraged loans are made to highly indebted borrowers. The largest UK banks on average only hold 1.5% of their common equity tier 1 (CET1) capital in leveraged loans, the report says. Collectively they hold 1% of the global stock of collateralised loan obligations (CLOs). “UK banks’ holdings of these securitisations are very small and