THE dominance of Royal Bank of Scotland and Lloyds in the small and medium-sized business banking market north of the Border has been underlined in an official report.

This report on the market in 2014, published yesterday by the Scottish Government, puts the combined market share of RBS and Bank of Scotland owner Lloyds Banking Group at more than 70 per cent.

The report shows that more than one in four small and medium-sized enterprises (SMEs) in Scotland believed that access to external finance was an obstacle to success.

However, while 27 per cent of SMEs expressed such a view, this does represent an improvement on the position two years earlier.

In the previous SME Access to Finance Report, in 2012, 41 per cent of firms surveyed cited access to finance as a barrier to success.

The latest report states that, including those businesses that refused to answer or did not know, 42 per cent of those SMEs with employees banked with RBS and 30 per cent held an account with Lloyds Banking Group.

The combined SME banking market share of RBS and Lloyds is little changed from the 70 per cent stated in the 2012 report.

Colin Borland, head of external affairs for the Federation of Small Businesses in Scotland, said: "Ahead of the General Election, we're calling on all of Scotland's political parties to commit to developing a business finance model that works for small businesses.

"Two banking behemoths continue to dominate the Scottish business finance market. Until we see more players fighting for the smallest firms' custom , we're unlikely to see the innovations and levels of service which our economy needs."