HSBC has unveiled plans to increase the funding it makes available to small and medium sized enterprises in Scotland to a record level for the bank in spite of concerns for the outlook for the economy.

The London-based giant said it has allocated £500 million for lending to SMEs in Scotland, up from £450m in 2016.

The move signals confidence in the prospects of SMEs in Scotland on the part of HSBC, which appears to be trying to increase its share of the market in a country in which it has a relatively small presence.

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The UK allocation has been maintained at £10bn.

HSBC’s decision to make more funding available in Scotland was welcomed by the Federation of Small Businesses.

The federation’s head of external affairs in Scotland, Colin Borland said: “HSBC have historically been smaller players in a Scottish SME banking market dominated by the twin giants of RBS and Bank of Scotland. If this move is a sign they’re upping their efforts to secure a bit more market share and give small business customers more choice,that has to be good news.”

Competition between lenders may be making it easier for small firms to get credit. There were persistent complaints that minnows were staved of affordable funding by banks in the wake of the financial crisis.

Mr Borland noted: “The lending environment for smaller businesses in Scotland has continued to ease in recent years. Indeed, as a barrier to businesses realising their ambitions, the availability and cost of credit is now nothing like as significant as rising costs or shaky consumer confidence.”

HSBC said it approved 91 per cent of small business lending applications in the last year.

Regional Director for Scotland Andrew Little said the launch of the £500m fund reaffirmed HSBC’s commitment to support the growth of Scottish SMEs ranging from start-ups to established businesses.

He noted that Scotland has many ambitious businesses that are keen to grow locally, nationally and internationally. The fund is all about helping them achieve their ambitions.

Recipients of support last year included Inverness-based seafood supplier Coast and Glen. The business used an overdraft from HSBC to help grow sales south of the border.

HSBC said it issued more than 90 per cent of last year’s fund in Scotland, which was one of the strongest performing regions across the UK.

Neither RBS or Bank of Scotland have said how much funding they have allocated to SMEs in Scotland this year.

Bank of Scotland owner Lloyds Banking Group has said it expects to increase the amount of lending provided to SME and mid markets customers, with up to £750m turnover, by £2 billion this year, net of repayments.

RBS supported around 8,000 small businesses, not including medium sized firms, in Scotland last year. It advanced £210m new loans to sector players.

Santander UK chief executive Nathan Bostock said it expects to increase lending to SMEs in Scotland this year. He sees scope for the Spanish-owned firm to win market share in Scotland with its challenger bank approach.

In April, Clydesdale Bank owner CYBG said it expected to maintain lending to SMEs in Scotland at around £400m this year.