Sept. 15 (Bloomberg) -- The Bank of England loaned financial institutions an additional 5 billion pounds ($9 billion) for three days in an exceptional fine-tuning operation after Lehman Brothers Holdings Inc. filed for bankruptcy.

Banks bid for 24.1 billion pounds, the U.K. central bank said in a statement in London. Of that, 20.75 percent of the bids were allocated. The bank said earlier that the sale was being held in response to conditions in short-term money markets.

``This is significantly oversubscribed,'' said Philip Shaw, chief economist at Investec Securities in London. ``It largely reflects the tension in the money market after the announcements over the weekend. It's very welcome to see the Bank of England respond with extra liquidity.''

Lehman, the fourth-largest U.S. investment bank, today sought bankruptcy protection and Merrill Lynch & Co. yesterday agreed to be bought after the yearlong credit squeeze cost banks almost $515 billion in losses and writedowns. The European Central Bank also said today it would lend additional cash.

``What events this weekend have once again demonstrated is that there are challenges affecting financial markets in every country across the world,'' Michael Ellam, Prime Minister Gordon Brown's spokesman, told reporters today. ``The U.K. economy is better placed than it has been in the past to deal with these challenges.''

The Bank of England said earlier that it is monitoring conditions in money markets and pledged to ``take appropriate actions if necessary'' to stabilize them. The U.K. Treasury is in close contact with U.S. authorities, an official said.

The Financial Services Authority will ask banks including HSBC Holdings Plc to clarify their liabilities with Lehman, spokeswoman Teresa La Thangue said in an interview. The FSA is working closely with U.S. authorities to ensure an ``orderly wind- down'' of Lehman's principal U.K. trading subsidiary, the London- based regulator said in a statement today.

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

Last Updated: September 15, 2008 06:33 EDT