France's government last night handed its banks €10.5bn ($13.9bn) in funds on the best terms of any government-sponsored capital injection in Europe as it seeks to kick-start lending between them and put them on an equal footing with peers in the UK and Germany.

Christine Lagarde, the French finance minister, said last night the Government would make the funds available in the form of subordinated loans, which rank ahead of ordinary and preference shares in a company's capital structure.