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UK banks 'cut lending to non-financials by $2.4bn last month'

Banks on the UK high street cut their lending to non-financial companies by a further £1.5 billion ($2.4 billion) last month, new figures have shown.

Data published today (26 September) by the British Bankers' Association (BBA) has revealed that financiers remain reluctant to offer loans to such organizations as the country's double-dip recession rumbles on, Herald Scotland reports.

Throughout August, non-financial firms continued to borrow significantly less than they paid back to banks, despite the launch of the Bank of England's (BoE) new Funding for Lending scheme (FLS).

The central institution hoped this initiative - which permits financiers to lend money cheaply as long as they pass these savings on to consumers and businesses - would provide an immediate boost of credit to the market.

However, BBA figures show that net repayment went up by some £1 billion last month when compared to July, meaning these organizations have now returned around £10 billion to banks in the last seven months.

By Gary Cooper