THE chief executive of business and commercial banking at Royal Bank of Scotland said he was frustrated some small and medium enterprise customers would not approach the bank to discuss funding.
Ian Cowie, who was in Scotland yesterday visiting companies, including start-ups, at the Entrepreneurial Spark organisation in Glasgow, believes some businesses are still too anxious to ask the bank for anything.
He is aware RBS still has to rebuild trust and confidence with its SME customers and, although he admits access to lending is crucial, he also wants the bank to be seen as providing access to expertise to help small businesses thrive.
He said: "We are doing everything we can to support viable businesses at appropriate pricing.
"I'm frustrated there are people out there who still don't want to come and talk to us, even though they have a funding need.
"Some fear we might withdraw their overdraft or something like that but clearly that is not in our interests to do that.
"What we have done is tried to encourage customers to involve us early if there is a situation. If you get to a problem early enough, there are options but if you get to it later the options are much less.
"There are also too many situations where people don't take their idea forward or come to talk to a bank about how they can do that.
"Funding is a part of that process but there are so many other things that are needed, such as access to systems, support and expertise.
"For me that means how do I make sure I have better more experienced people having conversations with our customers so we can understand their businesses much more."
Colin Borland, from the Federation of Small Businesses in Scotland, said: "I think some of our members have been afraid to talk to the bank and there is no doubt that relationship has been damaged in recent years.
"Trust and confidence will only return through people having better experiences with their bank."
Mr Cowie confirmed RBS is working closely with the Financial Services Authority to deal with the potential mis-selling of interest rate swap products "professionally and responsibly".
He said: "We have said to all of our customers that if there is a situation they think is not right then come and talk to us."
However, he was adamant the higher costs some SMEs are paying for funding are necessary because of current economic conditions.
He said: "The industry has made no secret it needs to pass on the costs of its raw material.
"It is important how you go about that.
"There should be a face-to-face conversation and we need to explain the rationale behind the decision.
"If the business model doesn't work with base rates at 0.5% then it probably isn't going to work. Pricing is just one component.
"The reality is that the cost of funding is not a massive barrier.
"It remains a demand issue and about people having the certainty to make investment decisions."
While details on the potential multi-billion pound "funding for lending" package recently announced by Sir Mervyn King and Chancellor George Osborne have still to be made available, Mr Cowie believes any stimulus will prove useful in boosting confidence.
However, he cautions that not every business idea will receive backing. He said: "We have a role where it is just as important to tell people early we don't think the idea is going to work or it doesn't lend itself appropriately to funding.
"Sometimes the best piece of support we can give someone is telling them something isn't going to work and also the reasons why.
"Where it is clear the person needs some more help and support, then that is the role we need the relationship managers and local business managers to step into.
"Perhaps in the past we may not have fulfilled that role as well as we should have done but now it is absolutely crucial if we are to play a role in kickstarting the economy."
In a separate development, RBS is facing a cut of up to £300 million in the proceeds it will receive from selling a 318-strong branch network to Santander.
The part-nationalised lender agreed the deal in August 2010 and it was expected to complete by the end of this year.
However, RBS has signalled the transaction will not complete until early 2013.
The stuttering UK economic recovery and turmoil in financial markets have also hit banks' profitability.
The agreed price was £1.65 billion, including a £350m premium over the value of the business, which boasts 1.8 million retail customers and 244,000 small business clients.
But it is thought the portfolio has missed some performance targets and Santander is now expected to pay just a small premium.
The portfolio includes 311 RBS branches in England and Wales and seven NatWest branches in Scotland.
RBS has until the end of 2013 to sell the business under European Union state aid rules.
