Government set to boost bank lending

LONDON (Reuters) - The government will announce plans to boost bank lending to small businesses on Thursday that could include the European Investment Bank shouldering more risk.

"Having recapitalised the banks, we want to ensure that they will extend availability of credit at competitive prices," Prime Minister Gordon Brown told parliament. "Further announcements will be made tomorrow when we have a meeting with the banks."

Britain has called on the EIB, the European Union's public lending arm, to take on more of its partner commercial banks' risk for lending to small businesses to help them withstand the global credit crunch.

Under the EIB's global loans programme, the lender matches cash from intermediary banks for the finance of small or medium-scale business investment projects but the risk remains with the commercial bank.

(Reporting by Matt Falloon, editing by Kate Kelland and Stephen Nisbet)