Big banks on board for government's £80bn new loan offering THE majority of Britain's major lenders have signed up to an £80 billion initiative designed to ease the flow of credit to cash-strapped households and businesses, the Bank of England has announced. Paul Fisher, the Bank's executive director for markets and a member of its monetary policy committee, said a "significant number" of other institutions were poised to join the Funding for Lending scheme (FLS), launched in August to offer banks access to cheap loans on the condition that they increase lending to the wider economy. With 13 banks and building societies - accounting for around 73 per cent of UK lending - already signed up, Fisher stressed FLS was developed to benefit the economy, not lenders, although he admitted there are likely to be knock-on benefits for those that do access the scheme. He said: "The scheme depends on banks exploiting the opportunity to make more loans, and more profitable loans, because that is in everyone's interest. If they don't respond by lending more, competition will probably mean that they make fewer profits because other firms will take their business. Barclays, Lloyds, Nationwide, RBS and Santander are among those on the list of FLS participants. HSBC has not joined the scheme, as it uses deposits from retail customers to lend, although it has not ruled out signing up in the future. Lloyds confirmed last week that it had drawn down £1bn from the Bank of England and would start lending the money out within the coming weeks. Fellow state-backed lender RBS was the first bank to announce cheaper loans directly linked to the FLS initiative, cutting rates for mortgage borrowers, small businesses and more recently manufacturers. Yesterday it said it had made more than £1bn of discounted loans available through the scheme, saving SMEs more than £20m by reducing interest rates by up to 1.7 per cent. Chris Sullivan, chief executive of corporate banking, said: "This is a real opportunity to stimulate growth - the strongest way we can do this is to offer our best ever terms on SME loans and discounts for mid-sized manufacturers." However, Stewart Baird, founder of small business investor Stone Ventures, said he doubted whether the smallest companies with the highest growth potential would see any of the new loans. He added: "Sparking the economy back into life with cheap money is like trying to light a damp pile of kindling with a soggy box of matches. Cheap money alone will not spark growth. Money in the right places will.