Clydesdale Bank increases loans

The Clydesdale has produced a special note for the Year of Homecoming

The Clydesdale Bank has said that new lending increased by £1bn in the three months to the end of June.

The bank also pledged to lend a further £1bn in the next quarter.

In its latest trading statement, the Glasgow-based bank said that despite intense competition, retail deposits grew strongly by 4%.

But the bank said bad and doubtful debt had also risen. Its parent company said it was selling new shares to raise £1.34bn as a buffer against bad debts.

The National Australia Bank said it was also selling the shares to scout for acquisitions.

Last month bank announced it was buying the UK insurer Aviva's Australian wealth management businesses for £401m.

Meanwhile UK banks have come under fire from the think tank, Ernst and Young Item Club.

It said banks and financial institutions continued to sit on cash despite £117bn of quantitative easing since March.

'Sitting on cash'

Hetal Mehta, senior economic advisor to the think tank, said: "We have seen a continued deterioration in broad money growth and M4 lending.

"The implication is that the banks and financial institutions are sitting on the cash received from the Bank of England rather than lending it, which is worrying."

It called for the Bank of England to step up its programme of quantitative easing.

However figures from the Royal Bank of Scotland revealed that lending through the government-backed Enterprise Guarantee Scheme (EFG) had now exceeded the £200m mark.

The bank said this had provided vital financial support to small and medium sized companies in difficult market conditions.

The EFG offers banks a tax payer guarantee for 75% of the value of certain loans if a firm defaults.

In Scotland £36m has been agreed or is in the pipeline, with 300 businesses in Scotland having received support from RBS under the scheme.