THE BANK of England today announced a £300m decline in net lending during the first quarter by banks participating in its Funding For Lending Scheme.
The scheme offers cheap funding to banks in an effort to cut interest rates and increase lending.
Analysts predicted a fall over the period, as several major banks are still cutting back lending as they restructure in the wake of the financial crisis.
For the three months ended 31 March, 13 participants made drawdowns of £2.6bn, taking the total amount drawn under the scheme to £16.5bn.
“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, Executive Director for Markets at the Bank of England.
“The plans of the FLS participants suggest that net lending volumes will pick up gradually through the remainder of 2013.”