The FSA has borrowed a total of £200m from two banking giants after falling into debt for the first time, reports suggest.
According to the Independent on Sunday (IoS), the regulator has drawn on a £100m credit agreement with Lloyds Banking Group and borrowed a further £100m from HSBC.
The FSA spent £347m in the past year but raised only £324m from fees and other revenues. Although its cash balance averaged £56m last year, it had fallen to just £200,000 by the end of March, compared with £24.8m in the same month in 2008.
As a result of the shortfalls, directors have been tasked with reviewing the organisation's cashflow.
According to the IoS, the situation has forced the FSA to draw on the Lloyds facility for the first time, but the board, chaired by Lord Turner, has also sanctioned the additional £100m facility with HSBC.
It says the cashflow deficit was exacerbated by a £14m shortfall in fee income from financial services firms at a time when the regulator's costs are rising because of increased supervision.
Fees are being raised by an average 36% for the current year; the IoS calculates this would give the regulator £435m.
The FSA's balance sheet shows liabilities exceeding assets by £123m, partly due to an £89m pension deficit.
