UNITED Kingdom banks may have tapped the Bank of England's special funding plan for about 200 billion pounds (US$354 billion), according to UBS AG analysts, as wholesale funding markets stay closed.

The central bank in April introduced the so-called special liquidity scheme, allowing UK lenders to swap mortgage-backed securities damaged by the credit squeeze for government bonds, Bloomberg News reported. The window for borrowing closes in October, after which the central bank will announce how much money has been handed out.

"We believe the Bank of England is encouraging all eligible players to make full use of this facility," said the analysts led by Alastair Ryan in a research note to clients. "With securitization markets closed, the banks are incentivized to do just that."