Chris Sullivan, chief executive of Corporate Banking at the Royal Bank of Scotland, said a perceived unwillingness of banks to lend in the UK is a misconception and low lending levels are due to low demand from businesses.

Speaking at the EEF National Manufacturing Conference in London on 5 March, Sullivan said businesses, particularly SMEs, are now hoarding cash with deposit levels up on three years ago and overdrafts down over the same period.

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Sullivan, whose role includes the management of Lombard, RBS’s asset finance division and headline sponsor of the EEF event, said there is a "misconception" in the UK that banks do not want to lend.

"[As a business] I need to lend money but I need to lend it to companies who want it," he said.

Speaking specifically about Lombard, Sullivan said the firm’s "whole rationale is to fund businesses" and highlighted the company’s lending to the manufacturing sector had increased 66% year-on-year in 2012.

Lombard’s overall lending increased 10% year-on-year while year-end figures from the Finance & Leasing Association showed asset finance across the UK increased 5% in 2012 for deals up to £20m and up 3% when high-value deals are included.

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Sullivan was echoing the words of Conservative peer Lord Heseltine who, speaking earlier at the event, said he was sceptical bank lending was lacking and said firms simply do not want to borrow in the current economic climate.

Lord Heseltine said: "The confidence which drives lending does not currently exist."

The Bank of England’s Credit Conditions survey for the fourth quarter of 2012, which analyses the availability and demand for lending, found the availability of credit increased for companies of all sizes over the final three months of the year while demand fell for small businesses over the same period.

Lending data from the Bank of England’s Funding for Lending scheme showed £9.5bn in discounted funding was accessed by banks in the fourth quarter of2012 while overall bank lending dropped by £2.4bn compared to the previous three months. Overall lending to businesses was down 4.1% over the 12 months to November 2012.