The central bank of UK declared that the £995 million pre-tax profits in 2008 were mainly due to the extraordinary measures carried out during the past year. It has also made an income after tax of £573 million on the quantitative easing scheme.
Most of the revenue the bank gets come from the spread and repo operations, in which it lends cash in exchange of collateral. This time the bank lending witnessed five-fold increase from last year due to the current financial crisis. However, only half of this bolsters the bank’s coffers, as the other half has to be diverted as dividends to the treasury, as the tax is paid.
Bemoaning that the bank is not allowed to improve its profits, a spokesman of the bank said: “the bank’s profit is a consequence of policy decisions to tackle the financial crisis. It is entirely right that it charges fees to set the right incentives for financial institutions to use its facilities, and protect itself and taxpayers from potential credit risk.
Mervyn King, Governor, BoE, requested the Government to confer the Bank with more powers to monitor other financial institutions in the future.
