RBS launches small business lending review

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Media captionBusiness Secretary Vince Cable: "They (RBS) have become very risk averse"

Royal Bank of Scotland (RBS) has launched an independent review of its lending to small businesses.

The bank has hired former Bank of England deputy governor Sir Andrew Large and management consultancy Oliver Wyman to look at its lending practices.

RBS - which is 81%-owned by the government - said in May that it had £20bn that could be lent to UK businesses.

The bank's net lending to business fell by £1.6bn in the first quarter of 2013.

That was despite RBS accessing the government's Funding for Lending scheme, which aims to boost lending by banks.

'Sensible step'

The review will examine how RBS makes its decisions on small and medium enterprise (SME) lending, and will take the views of customers, business groups, regulators and the government.

A dedicated website will be launched through which SME customers can give their experiences of lending by RBS. The review will take place over the summer, with the report's findings and recommendations published later this year.

RBS says that the purpose of the review will be to identify steps that it can take to improve its support to SMEs and the economic recovery, while maintaining safe and sound lending practices.

"Demand for lending remains a challenge, but we want to do more than just wait for demand to materialise," said Chris Sullivan, RBS's head of UK corporate banking.

"We want to play our part in securing the recovery."

Adam Marshall, director of policy at the British Chambers of Commerce, called the review a "sensible and welcome step".

"In order to improve transparency and trust, it is crucial that all financial institutions pledge to address any barriers - real or perceived - to SME access to capital," said Mr Marshall.

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Media captionChris Sullivan, RBS: "We want to lend more money to British businesses"

Business Secretary Vince Cable told the BBC that both he and many businesses were frustrated by RBS's lending restrictions.

"They cannot get money out of that bank, because of tough limits they've imposed"

"I was told about this £20bn down the back of the sofa quite a long time ago by Mr Hester, and I couldn't understand his problem," added Mr Cable.

"I hope that £20bn will be put to good use - there are plenty of British companies that could use it."

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