Stockholm  - The Swedish government Thursday prolonged its guarantee programme for bank lending, in an attempt to free up more credit.

"Even if the financial markets are functioning better, the global financial crisis and its ramifications for jobs and companies in Sweden is far from over," Financial Markets Minister Mats Odell told reporters.

Under the programme, the government is prepared to lend money to banks that are having difficulty getting credit from private sources. The banks, in turn, lend this money on to others.

So far, only one of the four major Swedish banking groups, Swedbank, has signed on to the programme.

The government said the guarantee programme had contributed to lower lending rates, saying the commercial banks had shadowed the central bank's interest rate cuts.

The programme, extended to October 31, is authorized to loan up to 150 billion dollars.

The Financial Supervisory Authority said the other Swedish banks had managed to secure capital from shareholders.

"That is quite unusual in Europe," the authority's director general Martin Andersson told Swedish radio news.

The authority said Swedish banking groups have a good level of capitalization. (dpa)