BoE urged to lend via regional funds- FT

Pedestrians pass The Bank of England in the City of London February 14, 2012.

LONDON (Reuters) - The Bank should fund small businesses directly through a network modelled on Germany's regional lenders to restore economic growth in the regions, the Financial Times reported on Tuesday.

The newspaper said, citing a report by the UK's commission on the future of local government, that the BoE's 325 billion pound ($509.91 billion) quantitative easing programme has had little impact on lending to businesses in the UK's regions, despite its promise of improving liquidity in the banking system.

"The Bank of England should consider establishing shadow city banks in the German Landesbank model to channel QE resources more directly to small businesses," the FT cites the report as saying.

The report, published on Tuesday, has the backing of city councils in the British cities of Leeds, Glasgow and Cardiff, and the Local Government Association.

($1 = 0.6374 British pounds)

(Reporting by Stephen Mangan)