£500m borrowed in new Bank scheme
A total of 35 lenders, including most of Britain's biggest banks, have signed up to the Bank's Funding for Lending scheme (FLS) and have drawn down £4.4 billion between July and September.
The scheme was launched over the summer by the Bank and Treasury to offer lenders funding at low interest rates on condition it is passed on to households and businesses.
Alan Clarke, economist at Scotiabank, said the FLS take-up had been "encouraging" and added: "Quite whether it kick starts the chain reaction that is required to get the economy going is less clear. Nonetheless, it is a case of so far so good with regards to the take-up of the scheme."
The figures showed that net lending by four major high street banks - Lloyds Banking Group, RBS, Santander and Co-op - had fallen in the three-month period. But other banks, including Barclays, boosted net lending between July and September.
RBS said it has used the FLS scheme to cut interest rates on small business lending by up to 1.7% to as low as 3%, as well as removing arrangement fees. A statement from the 80% state-owned lender said: "We will continue to offer these attractive rates to send a clear message that RBS is open for business."
Fellow taxpayer-backed lender Lloyds Banking Group said it intends to apply to draw a further £2 billion under the scheme, following an initial £1 billion drawdown in September. Lloyds chief executive Antonio Horta Osorio said: "Lloyds was the first bank to access the Funding for Lending scheme and we have passed on the benefits of this lower funding in full, in particular focusing on first-time buyers and small businesses, where it will make the most economic impact."
The Bank recently said the FLS is helping homeowners but is yet to have an impact on businesses. The Bank said some business lenders were still "tightening terms" despite the launch of the scheme and it has had "a more immediate impact" on the availability of mortgage approvals.
Economic Secretary to the Treasury Sajid Javid said: "It's still early in the life of the scheme, but Funding for Lending has already helped to deliver half a billion in loans for households and businesses. Though it will take time to fully feed through, today's positive data shows participating banks are increasing their lending."
© 2012 Press Association