Executives of the UK’s five biggest banks on Thursday met Mervyn King, governor of the Bank of England and agreed to continue “close dialogue” to restore “more orderly” market conditions.

None of the participants disclosed details after the regular meeting, which was called to discuss financial stability and banking legislation reform. However, it is understood that the meeting was positive and co-operative.

The UK banks are thought to have been pushing for the Bank to inject greater liquidity into the banking system.

They have been pushing for the Bank to accept a wider range of collateral in return for cash as well as more frequent liquidity and also that the money provided will be of a longer duration – such as 6 months.

The Bank said on Thursday that emergency additional lending to UK banks was to be maintained for the rest of the month.

Commercial banks are again hoarding cash and refusing to lend to each other, sending bank borrowing costs soaring. The banking executives want the Bank to lend more money and against a wider range of collateral, and are likely to be only partly satisfied by Thursday’s announcement.

The Bank said it would continue to lend an additional £5bn for the rest of the month, until the next meeting of the monetary policy committee in April, an injection of cash that it first pumped in on Monday for three days.

The sum represents an increase of 25 per cent in the financing of British banks. With the interest rate fixed at 5.25 per cent, the aim is to bring overnight interest rates back down to the official rate.

This week’s offer was heavily oversubscribed, as was a similar auction on Monday, because the money is cheaper than that available in the market.

Banks on Thursday bid for £30.3bn of the cash, compared with a total refinancing (including the additional £5bn) of £10.9bn. The weekly refinancing was therefore almost three times oversubscribed.

The Bank of England meeting came the day after shares of HBOS plunged on concern that tighter credit markets will make it harder for the lender to fund its business. HBOS has said it has “no liquidity problems”. By Thursday night HBOS had recovered almost all its losses, closing at 473.75p.