The chief of Lloyds TSB has criticised the cost of the government’s bail-out of the banking industry and blamed it for helping to discourage lending.

In a video interview with the Financial Times, Eric Daniels said the cost of the preference shares banks were issuing to the government and continued strains in the wholesale funding markets had reduced banks’ appetite for new lending. “I don’t believe that banks are going to quickly restore lending and help the economy because of the funding and the capital issues,” he said.