Some of Europe’s biggest financial institutions, including Lloyds TSB and HBOS, have raised €10 billion (£7.9 billion) in the debt markets in the past few days. It is the biggest rush to issue bonds since the credit crisis took hold last summer.

Rising confidence in the financial system thanks to recent intervention from central banks saw the cost of issuing debt narrow slightly, analysts said, creating a brief opportunity to raise cash.

The fundraising window coincided with mounting pressure on banks to restore their balance sheets in the wake of credit-market losses.

HBOS, which has unveiled plans to launch a £4 billion rights issue, last week raised €1.5 billion of senior debt.

Lloyds TSB raised close to £1 billion in two separate deals, one in euros, the other in dollars. The bank will pay investors interest rates of close to 8% in both securities.

French banking giant Société Générale, Italy’s Intesa and Belgium’s KBC all raised more than €1 billion each. National Australia Bank, which owns Clydesdale Bank and Yorkshire Bank in Britain, raised €1.25 billion.

Standard Chartered, the London-headquartered emerging-markets bank, raised $675m (£345m) of capital after agreeing to pay investors an interest rate of 8.125%.

Insurers also raised cash, with Aviva, the British insurance giant, bringing in close to £1 billion. Holland’s ING and Norway’s Storbrand also raised capital.

The flood of fundraising came after it emerged that Britain’s banks were preparing to draw down as much as £90 billion from the Bank of England’s Special Liquidity Scheme – designed to free up bank balance sheets.

Signs are also emerging that banks are moving to shift the backlog of leveraged loans held on their balance sheets.

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts