The Bank of England announced an unprecedented series of £5 billion cash injections for the banking sector, after high street bank chiefs pleaded for more liquidity.

The auction yesterday of £10.9 billion by the Bank – £5 billion more than expected – was one of a series of props provided by central banks to the financial community.

The European Central Bank offered €15 billion (£11.7 billion) and the US Federal Reserve said that it would make $25 billion (£12.6 billion) available.

The Bank of England said that it would continue to offer an extra £5 billion of one-week money on top of its usual repo auctions every week until its policymakers decided whether to change lending rates at their next monthly meeting on April 9.

The banks are thought to have asked for more cash at a meeting with the Bank yesterday.

Andy Hornby, chief executive of HBOS, John Varley, chief executive of Barclays, Sir Fred Goodwin, chief executive of Royal Bank of Scotland, and Stuart Gulliver, head of investment banking at HSBC, were among the leading bankers who met Mervyn King, the Governor of the Bank.

The meeting came a day after HBOS and the Bank were forced to issue vehement denials that the owner of Halifax and Bank of Scotland had sought an emergency loan.

In a statement after the meeting, the Bank and the banks had “agreed to continue their close dialogue with the objective of restoring more orderly market conditions”. But sources said that the banks went into the meeting keen to see regular, large auctions of cash and a loosening of the collateral accepted by the Bank on loans.

There were indications last night that Mr King had been sympathetic to the pleas for the Bank to follow the Fed and consider expanding its emergency lending facilities, perhaps to include accepting a wider range of collateral for the crisis loans.

But reports that the Bank was considering such moves prompted immediate warnings that it should think again. John McFall, chairman of the Commons Treasury Committee, told the BBC that the Bank should be “very wily”. Mr McFall said that banking groups should be told: “If you’re going to get this money there has to be a penalty at the end of the day, for this is money. Yes, we’ll give you it because the system is in such a mess, but don’t think this is a handout.”

The Bank’s capital injections have been sporadic so far – £10 billion of three-month money in December and January, a further £10 billion of three-month funding on Tuesday and £5 billion of three-day money on Monday. These were on top of the weekly auctions.

A bank source said: “The banks want a level playing field between British banks, continental European banks and American banks. The British central bank has done far less than its counterparts to address the issue of liquidity and the money markets and has a much tighter definition of the collateral that it will accept.”

Signs of distress remained in the money markets yesterday, with the cost of interbank borrowing again rising. Libor for three-month sterling increased for the tenth day in succession to 5.9875 per cent, its highest point this year.

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