The fund, of which £1 billion has been allocated to UK businesses, will ‘help customers with fundamentally sound businesses weather short-term shocks caused by the downturn’, according to the bank, which adds that cash will be allocated on a case-by-case basis using its normal lending criteria.

Chancellor Alistair Darling, who urged banks to support SMEs in his Pre-Budget Report, says the move is ‘a welcome step’.

HSBC has also pledged to increase its mortgage lending to £15 billion next year. The bank currently has a 3.6 per cent share of the UK mortgage market, according to 2007 figures.

In related news, Lord Drayson, the minister for science and innovation, says the need for a proposed £1 billion fund for technology start-ups is now ‘urgent’.

Speaking at an event organised by the National Endowment for Science, Technology and the Arts, Drayson adds, ‘The small proportion of UK investment going into early-stage [ventures] – at only four per cent of total equity investment – is hurting UK spin-outs.’