ROYAL Bank of Scotland's head of corporate banking says he wants to expand his balance sheet by lending to companies capable of paying him back.

Chris Sullivan, chief executive officer of the 82% taxpayer-owned RBS's corporate banking business, said he would "love to have a situation" where he had so much demand for lending from businesses that he could not satisfy it with the capital he had.

Mr Sullivan's comments, in an exclusive interview with The Herald, come against the backdrop of continuing heated debate between the wider banking sector and businesses over lending.

Parts of the business community continue to argue that they are unable to secure funding at all, or at an acceptable price, from the banks.

The banks, however, highlight a lack of demand for borrowing and a determination by some businesses to pay down their debt.

While declaring that no-one would thank him if he said "let's have a free-for-all" in terms of lending, Mr Sullivan told The Herald: "My aim is to be absolutely responsible, to help people to invest wisely.

"I have no constraints on me to do that. I have got capital.

"That capital will be used in the UK for our business customers."

Mr Sullivan, whose corporate banking remit covers everything from start-ups and small businesses through to the biggest companies, said: "I would love to have a situation where I had so much demand I couldn't satisfy it with the capital."

He made it plain that he was bothered about the net movement in lending, taking into account repayments as well as new advances.

However, he is not in favour of targets based on net lending because of an inability to control how much businesses choose to repay.

And he declared that businesses had in recent times been repaying about 50% more than they were contractually obliged to do.

There has been much debate over the fact that Government-set targets for lending to both businesses and individuals are based on gross figures, as opposed to the net movement. Questions have been asked over the usefulness of such gross targets.

Mr Sullivan said: "I am in a business too. I want to grow. Having a balance sheet that is not growing is not part of my plan for the next four years.

"I have more money to lend but I need to find customers (to) borrow that can pay me back."

He added: "I am interested in gross lending. I am interested in net lending too. I want my balance sheet to be growing. I think our interests are aligned (with businesses) in that respect.

"The one reason I would be anti a net lending target – I would never give one to my team because they can't control that number. They can control how much money they lend but they can't control how much customers pay back."

He declared that, in the last three years, customers had been paying back "roughly 50% more than they are contractually supposed to".

Asked whether he believed some companies were being too cautious about borrowing, Mr Sullivan replied: "I would be pretty arrogant if I tried to make a pronouncement on someone else's view of their businesses. They are worried about the stability of the macro factors, eurozone worries ... right now the southern (European) crisis, the fact all the news they see is negative, and doom and gloom so (they) just wait and see for a bit.

"I think there are a lot of people who are beginning to see some green shoots of opportunities. They are on the cusp of 'I will invest, but maybe just see what happens with this'."

He added: "I think you need a period of no doom for a while, a stable scenario for a relatively short period of time (and) I think people will get more confident."

Asked which sectors were most difficult, Mr Sullivan highlighted property.

He said: "The UK is pretty unique in terms of its exposure to property of all types, but commercial property (in particular)."

Highlighting huge commercial property lending by the UK banking sector as a whole in 2007, he added: "If you look at the lending that was done by banks in 2007 ... if you think about commercial property values being about half the level they were at that point, you have a difficult scenario for people who invested in property and the business models."

There has been some debate in recent times over whether uncertainty over Scotland's constitutional future, in terms of the independence debate, is having an impact on investment north of the Border,

Asked if he had seen any signs that constitutional uncertainty was having an impact on investment decisions by either indigenous companies or those making inward investment in Scotland, Mr Sullivan replied: "There has been nothing different. I am probably not looking for it. I haven't seen anything or heard anything. Nobody has mentioned anything to me at all."

He conceded banks should take some blame for the way they had operated before the financial crisis, but took issue with the finger being pointed entirely at the sector for the economic turmoil.

Mr Sullivan said: "Everyone wants to blame the banks for the economic crisis. I think that is a bit rich.

"Where I think banks can be criticised is (that), over the last 20 years, we have probably lost sight of the true rationale of a bank existing. We tried to sell products rather than really getting to know the clients and putting good bankers alongside them and giving them the things they need at the right times."

He declared that he was following an approach of combining "old-fashioned banking" with "some more modern techniques".