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£1billion is paid through fees and interest
The Bank of England has announced that it has made record profits of almost £1billion. The figure includes the months to February 28th 2009. The amount for the same time for 2008 was £197million and shows that due to the five fold increase, it is the largest amount made since the bank was first established in 1694.
The profits have meant that the bank has already paid the Treasury a dividend of £203million during April and will pay the same amount or similar in October. These payments have been made under the rules set up that require the bank to pay back a quarter of its post-tax profits to the government on two occasions during the year.
The bank has managed to make such large profits because it has shored up the banking system and so reaped the benefits of helping both high street and commercial banks with lifelines as they ride out the financial storm through payments of both interest and fees to the Bank of England. It earned £7million form supporting Bradford & Bingley and £4million from its backing of Northern Rock.
A spokesman for the bank said “The Bank has provided substantial liquidity support to the banking system. It is entirely right it charges fees to set the right incentives for financial institutions to use its facilities and protects itself and taxpayers from potential credit risk”.
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