RBS boss Hester 'desperate to lend'

Stephen Hester
Image caption Stephen Hester says economic worries are stifling borrowing

Royal Bank of Scotland is "desperate" to lend to UK businesses, the bank's chief executive has claimed.

In an interview with the Sunday Times, Stephen Hester said RBS was sitting on £20bn in cash but economic worries meant businesses were not borrowing.

"We are lending as much as we can," he said, adding that the bank could not "force companies to borrow".

Partly state-owned RBS reported a return to profit in its quarterly results on Friday.

It announced pre-tax profits of £826m and said it lent a total of £13.2bn in the first three months of the year - £7.8bn of it to small businesses.

But like other banks it has been urged to support the UK's economic recovery by increasing lending further.

The government and Bank of England recently announced an expansion to the Funding for Lending Scheme (FLS) - designed to provide cheap financing to banks on the condition they pass on the cheap loans to small businesses.

But Mr Hester's comments suggest economic recovery needs to happen first if businesses are to begin borrowing again.

"We are lending as much as we can... we are not constrained by either capital or funding.

"The only way I could see for us to lend more would be for someone to say we did not have to operate by any commercial standard - that we could undercut everyone because we did not have to make a profit."

Official estimates suggest the UK economy grew by 0.3% in the first quarter of the year but overall growth remains sluggish.

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