Mervyn King, governor of the Bank of England (BoE), has acknowledged that banks are refusing to boost lending even after being showered with over £700bn of public money.

He said loans figures to date “have not been encouraging” despite unprecedented government efforts to restore flows of credit. King admitted that he “totally” shared the public’s frustration with the lending giants, which are starving customers of credit and exacerbating the downturn.

Still, King cautioned there could be improvement in coming weeks after Royal Bank of Scotland and Lloyds Banking Group signed up to new lending agreements.