RBS Orders Investigation Into Untapped $30 Billion Cash Pile

Britain's biggest lender, the Royal Bank of Scotland (RBS), has launched a major inquiry into the way it lends money to small- and medium-sized businesses.

The review will be led by Andrew Large, a former deputy Governor of the Bank of England. It comes after the partially nationalized lender admitted it had a 20 billion pounds ($30.4 billion) surplus on its books that could be used to support businesses.

Chris Sullivan, the chief executive of U.K. corporate banking at RBS, told CNBC the bank needed to learn to say "yes" to businesses seeking funds, rather than "no".

"We have a purpose in society and that is to help businesses grow and help increase jobs… and it is time someone independent comes in to see if there is something we are missing," said Sullivan. He praised the government's Funding for Lending scheme, which allows banks to borrow cheaply from the Bank of England on condition that they increase lending to businesses and households.

"Five years ago, we didn't have enough deposits to cover loans. We had 135 billion pounds [$205 billion] in loans to 100 billion pounds in deposits, and now we have 82 billion pounds in loans to 100 billion pounds of deposits," he said.

Sullivan refuted that RBS had become a "political football", despite reports that the U.K. government played a role in the departure of CEO Stephen Hester last month. Sullivan is a contender to replace Hester, and refused to deny he was interested in taking up his mantle.

(View More: Is the UK Chancellor Running RBS?)

He added that he supported the break-up of RBS into multiple U.K. banks, a strategy that has been pushed by Business Secretary Vince Cable as a means to boost banking competition and regional lending.

"I do believe regionalization of the bank is a good thing," said Sullivan, who explained the strategy would work best under a group umbrella.