“Other assets” on the Bank of England’s balance sheet rose by £29.3 billion between 12th September – just before the authorities stepped in to support Northern Rock – and 12th December, the latest available date. Northern Rock itself has claimed to have borrowed a smaller amount from the Bank – the BBC’s Robert Peston quotes a current figure of £26 billion. The discrepancy has led to speculation that the Bank of England has been providing covert support to other distressed banks.

The latest Bank of England Quarterly Bulletin, published yesterday, suggests this is not the case. Table B on page 509 of the Bulletin (page 27 on PDF) gives further details of changes in the Bank’s balance sheet between 5th September and 7th November. “Foreign currency denominated assets” are reported to have risen by £5 billion between these two dates, an increase that will have contributed to growth in “other assets” on the weekly Bank return. There was an identical rise of £5 billion in “foreign currency denominated liabilities” over the same period; both changes may reflect the Bank’s normal provision of banking services to other central banks.

Assuming “other assets” continue to be inflated by about £5 billion by foreign currency transactions undertaken since early September, the weekly Bank return suggests current lending to Northern Rock of about £24 billion (£29.3 billion minus £5 billion), close to estimates emanating from the troubled bank.