Insurers, not banks, driving liquidity trade
Insurance sector's hunger for high yields, rather than banks' thirst for short-term funding, driving liquidity trade
The recent trend for liquidity lending between insurers and banks is being driven by the insurance sector's need for higher yield and a more efficient collateral management, not banks' funding requirements, according to a leadiing tri-party custodian, JP Morgan Worldwide Securities Services (JPMWSS).
Liquidity lending - where an insurer lends liquid assets such as gilts or cash to a bank for a fee, with the bank then repoing those assets with a central bank for short-term funding - has been a
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