CHALLENGER banks are providing a higher proportion of loans to businesses in Scotland compared with the UK as a whole, new research has found.
The conclusion emerged in an analysis of challenger bank activity in the UK, based on the number of loans and charges registered at Companies House.
Aldermore and Clydesdale Bank, part of CYBG, were found to be the most active of providers of finance to companies by challengers in Scotland.
The research, by analyst Avention, found that challenger banks accounted for more than 45 per cent of business mortgages and charges (a security given by a company for a loan) provided to companies in Scotland at the end of April. That compared with a figure of 34.4 per cent for the UK as a whole. Of that figure 32 per cent, came from smaller challengers such as Metro Bank, Aldermore, AIB, Close Brothers, OneSavings Bank, Shawbrook Group and Secure Trust Bank.
The research, which classes Clydesdale and TSB as larger challengers, highlighted the strong presence of challenger banks in the north of Scotland, compared with elsewhere in the UK.
While 25.4 per cent of central London corporate loans by number were found to have been issued by challenger banks, the figure was higher in northern Scotland, at 46.5 per cent.
Avention said its research highlights a clear discrepancy between north and south, with challenger bank loan figures dominating the northern parts of the UK. The lowest percentage of corporate debt held by challenger banks by loan number is in London, the report found.
The analyst did not provide figures on the actual amount of lending made.
A spokeswoman noted that Aldermore, which provides invoice finance in Scotland, and Clydesdale, whose parent group CYBG floated on the stock market earlier this year, were the most active players among challenger banks lending to businesses north of the Border. And she said companies in construction services and real estate operations were the top two sectors for challenger bank lending in Scotland over the period. 
Aldermore group managing director Carl D’Ammassa said small businesses are increasingly spreading their banking across a range of institutions. “As one of the newer banks, we are certainly seeing an appetite amongst Scotland’s SMEs to explore their borrowing options,” he said. 
“In Scotland, the reduction in support for business from the traditional 
lenders has also resulted 
in small and medium-sized businesses looking 
to newer providers.” 
Paul Charmatz, senior vice president of Avention’s international business, said: “Avention’s data shows the significant market share that challenger banks enjoy when it comes to corporate lending, particularly the smaller challengers. 
“Avention will continue to monitor this data and reanalyse it in six months’ time. It will be interesting to see if our market insights continue to point to the success of challenger banks in the UK – and whether the same regional and sector trends are evident.”
CYBG made no comment yesterday but reported in July that it had booked £1.5 billion of new SME loans and facilities in the nine months to June 30, up four per cent on the year before.