Banks sign up to Funding for Lending scheme

By Daniel Culpan

Five of Britain's six biggest banks and financial institutions have signed up to the new Funding for Lending scheme, in an attempt to boost the economy by making cheaper loans available to businesses and personal banking customers.

The Bank of England, which is responsible for the initiative, said 13 banks and building societies in total had joined so far - with HSBC being the only one of the 'big 6' not taking part, as it says it doesn't need any extra funding.

Although the funding has been available since August, this is the first time the Bank has publicly named the names of the lenders who've joined the scheme.

All the participating institutions, which represent 73% of the market and lending worth a total of £1.2 trillion, can borrow up to 5% of their loan books right away - and even more if they meet certain conditions over the next 12 months.

The Funding for Lending scheme aims to make more affordable funds available to existing lenders and also encourage new ones to join the market. In recent times, as a result of the ongoing financial crisis and fears about the eurozone, banks have found it harder and more expensive to borrow. This has had a knock-on effect on individuals and firms looking to borrow money too.

Tags: Funding for Lending, economy, HSBC, financial crisis

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