BOE Repo Cash Fuels London Banks' Bond Trade Profits

The Bank of England's (BOE) repo cash is being tapped by banks in London to profit on bond trades.

According to people familiar with the matter, banks are borrowing billions from the central bank and using the cash to buy UK bonds paying a higher rate, pocketing the difference in the process.

The spread between the repo cash and the gilt yields has widened to well over a percentage point as gilt yields have surged, making it increasingly popular and profitable.