UK banking major Lloyds TSB has bought back £4.6bn of senior bonds denominated in euros, dollars and sterling from investors out of a total £13.7bn offered, in a move to reduce the towering funding costs of the bank as well as to demonstrate that the UK bank is fully funded.

Lloyds, the UK state majority owned bank owing to bailout package provided by the government, said the aim of the exercise was to optimize its future interest expense and show it was less reliant on wholesale funding markets, as reported by the Financial Times.

The move also follows the recent announcement made by the Bank of England, according to which banks could use their regulatory liquid assets buffers in the event of a "liquidity stress".

By the end of March 2012, Lloyds had about £106bn of primary liquid assets, out of which it only requires to hold about £70bn, the bank said.

Financial crisis as well as increasing non-performing assets has forced many European banks to remain dependent of European Central Bank money to help them maintain essential liquidity.