State Street quits UK auctions

LONDON - Reuters

The Boston headquarters of State Street Bank is seen in this file photo. The bank has withdrawn from UK government bond auctions.

State Street Bank Europe has resigned as a participant in British government bond auctions, the Debt Management Office (DMO) said, as banks find it less attractive.

While the number of banks taking part in government bond auctions has risen sharply across Europe in the past few years, many are now rethinking the increasing risk as politicians struggle to put an end to the eurozone debt crisis.

“Overnight, State Street Bank in Boston has announced its withdrawal from various global cash bond trading activities, which includes UK government bonds,” the DMO said yesterday.

Banks designated as a primary dealer - known as a gilt-edged market maker (GEMM) in Britain - commit to buying a certain percentage of government-issued bonds in return for a guaranteed chance to participate in the auction.