The Royal Bank of Scotland chairman has hit back at suggestions that banks have tightened lending to small businesses.

British banks have come under increased pressure recently to increase their lending to small and medium sized companies after receiving £500bn in a government bailout.

Many SMEs have reported that they are struggling to receive loans from banks, that the Bank of England's rate cuts have not been passed onto to them and that their interest rates have gone up.

Gordon Pell, chairman of regional markets at RBS has hit back at suggestions that banks should do more to help small firms.

He commented that the problems for small firms had been caused by the collapse of Icelandic firms and that small business lending was, "up by double digits from the past year."

"Even if UK banks significantly increase their lending you would not see the same availability," added Mr Pell.