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| Banks cut loans again, in spite of Funding for Lending | Banks cut loans again, in spite of Funding for Lending |
| (about 1 hour later) | |
| UK banks have continued to reduce the amount they lend, in spite of government attempts to reverse the trend. | |
| Latest figures from the Bank of England show that net lending fell by £300m in the first three months of 2013. | Latest figures from the Bank of England show that net lending fell by £300m in the first three months of 2013. |
| However, the figure is a big improvement on the previous quarter, when lending fell by £2.4bn. | However, the figure is a big improvement on the previous quarter, when lending fell by £2.4bn. |
| The government's Funding for Lending Scheme (FLS), launched last August, was designed to boost lending. | |
| Under the scheme, banks and building societies are allowed to borrow money cheaply from the Bank of England, providing they pass that money to individuals or businesses. | |
| FLS was recently extended by a year, until January 2015. | FLS was recently extended by a year, until January 2015. |
| Pick up | |
| The Bank of England said that banks had borrowed an additional £2.6bn under the scheme in the first quarter, taking the total amount that has been made available so far to £16.5bn. | |
| When FLS was launched, the government said it expected that up to £70bn would eventually be made available. | |
| The Bank of England said Monday's figures showed that new lending was coming on stream, as old loans were phased out. | |
| "The picture of flat lending growth overall is broadly as expected at this stage, reflecting reductions in some legacy portfolios being roughly offset in aggregate by expanding new lending," said Paul Fisher the Bank's executive director for markets. | |
| He said he expected new lending to pick up further through the rest of 2013. | |
| Some banks and building societies have increased their loans. Barclays and Nationwide were among the lenders to increase their loan book, while RBS, Santander, and Lloyds reduced the amounts they lent. | |
| HSBC has not taken part in FLS to date, preferring to finance loans from its own resources. |