Bank of America Merrill Lynch will make a £100 million loan to the UK’s financial sector after it emerged that a third of UK banks had failed to pay fines relating to the financial crisis.

The move follows the announcement by the Bank of Scotland on Monday that it will make similar loans to the country. 

The loans will cover the costs of the £7.2 billion (€7.9 billion) fund to be set up by the government on 1 October to provide additional liquidity to the economy following the closure of banks during the crisis. 

On Monday, the Bank has also committed to making up to £30 million available to help the UK recover from the economic damage caused by the financial collapse.

The UK Government announced on Monday it would provide an additional £1.6 billion (about $1.85 billion) in loans to firms that were among those that failed to meet their debt-to-GDP obligations.

The British banking sector has been the biggest beneficiary of the government’s new money, which has also come at a time when the Bank’s balance sheet has also been hit hard.

Banks in the UK are being hit by a drop in demand, a fall in the value of sterling and a slowdown in global demand, as a result of the economic crisis.