LONDON, July 3 (Reuters) - Royal Bank of Scotland (RBS) has commissioned a review of its lending to small businesses, responding to concerns of a shortage of finance in a sector seen as vital to Britain's economic revival.
The government-controlled bank, Britain's biggest lender to small businesses, said it had appointed former Bank of England deputy governor Andrew Large and management consultants Oliver Wyman to conduct the review.
The British government is concerned that poor access to finance among smaller firms may thwart a sustainable recovery from the country's worst slump in decades.
It has launched schemes such as Funding for Lending, giving banks cheap funding to encourage them to lend to households and businesses, but this has failed to stimulate lending and recent data showed business lending down on last year.
RBS said its review would focus on what steps RBS and its NatWest division can take to support small businesses and Britain's economic recovery while maintaining sound 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."
RBS is under extra under pressure to increase lending because the government controls 81 percent of the bank after pumping in 45.5 billion pounds ($69 billion) to keep it afloat during the 2008 financial crisis.
Stephen Hester, who was ousted as RBS chief executive last month, said in May the bank had 20 billion pounds of spare cash it was desperate to lend, but could not find takers because businesses lacked confidence in the British economy. ($1 = 0.6592 British pounds) (Editing by David Holmes)