Cable says split RBS into business lender Vince Cable has called for state-owned Royal Bank of Scotland to be broken up to create a vehicle for lending to small companies, as ministers scramble for ways to unblock credit lines to the sector. The business secretary's intervention, in a letter to David Cameron and Nick Clegg last month, was welcomed by some business leaders and is a sign that bank lending remains a major worry for the coalition ahead of George Osborne's Budget on March 21. The chancellor on Tuesday announced that his long-awaited credit easing scheme - designed to provide up to £20bn of discounted loans to small companies - would be set up before the Budget, with bank funding underwritten by the government. But the Treasury and Britain's banks have struggled to construct a scheme that makes business sense and is compliant with European Union competition rules. Mr Osborne said he expected to win state aid approval from Brussels in the coming days. HSBC and Barclays have both raised concerns about the scheme - the former is unlikely to sign up - to the dismay of the Treasury. Number 11 is keen to involve more than the two state-backed banks - Lloyds Banking Group and RBS - to ensure the programme is not viewed as state aid. As Mr Osborne hammers out a deal, Mr Cable will continue to press the banks, using a speech to the City of London Corporation to call on the financial services sector to do more to help SMEs access finance. Privately, Mr Cable has gone further, urging the prime minister to "carve out" a British business bank from RBS. "My suggestion is that we recognise that RBS will not return to the market in its current shape and use its time as a ward of state to carve out of it a British business bank with a clean balance sheet and a mandate to expand lending rapidly to sound businesses," he wrote. He also said such an institution should be on hand to "support our other industrial objectives, such as supporting exports and sectors identified as of strategic importance." Mr Cable's private lobbying will please the British Chambers of Commerce, which has pushed for such a body, alongside Adam Posen, a member of the Bank of England's monetary policy committee. But the business secretary's attempts to take a more interventionist approach with RBS will alarm the bank's senior executives who have repeatedly stressed that they must be allowed to run the bank commercially to have the best chance of selling down the taxpayer's 83 per cent stake. Mr Osborne on Tuesday fired the starting pistol for a frantic last few days of political horsetrading over the Budget insisting there would be no new money available for unfunded tax cuts or spending increases.