A former chairman and CEO of the Royal Bank of Scotland (RBS) has said that it would be "totally inappropriate" to restructure the bank to create a vehicle for lending to small companies.
Sir George Mathewson was responding to a leaked letter by the Business Secretary Vince Cable, in which he suggested the state-owned bank could be broken up to create a British business bank.
He said similar government schemes in the past had become bureaucratic, inefficient and it was not "a correct way to react".
Sir George said that the climate of trust between bankers, advisers and businessmen has "reduced markedly" over the last few years and small businesses "no longer feel they are in a joint collaborative effort with the banks".
"Regulators should encourage new businesses to provide finance," he said, and "getting relationships correct" between bankers and businesses should be a priority.
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