Handelsbanken, Metro Bank point way for UK challengers

* Handelsbanken total UK lending rises to 13.3 bln stg

* Metro Bank lending grows by 146 percent to 1.4 bln stg

* UK wants challengers to break dominance of biggest banks (Adds Handelsbanken's Q3 results in UK)

By Matt Scuffham

LONDON, Oct 22 (Reuters) - Sweden's Handelsbanken and Britain's Metro Bank reported a surge in lending to UK households and businesses on Tuesday in a sign of growing competition to Britain's established lenders.

British lawmakers are keen for challengers to break the dominance of the UK's 'big 4' banks -- Lloyds Banking Group , Royal Bank of Scotland (LSE: RBS.L - news) , Barclays (LSE: BARC.L - news) and HSBC -- and the country's competition watchdog has launched an investigation into services for small business customers and personal current accounts.

Handelsbanken, which has been growing rapidly in Britain, said it increased lending to British businesses by 7 percent to 9.1 billion pounds ($14.61 billion) during the third quarter while its lending to individuals in Britain rose by 24 percent to 4.1 billion pounds.

The bank's total lending in Britain is now 13.3 billion pounds.

Handelsbanken, which has 180 branches open, or about to open, in Britain, said its total UK deposits now stood at 7.8 billion pounds. It made an operating profit of 1.2 billion Swedish crowns (103 million pounds) in the third quarter.

Metro Bank, which launched in 2010 as Britain's first new UK consumer bank in more than a century, said it had increased lending by 146 percent over the past year to 1.4 billion pounds.

However, the bank made a loss of 9.4 million pounds during the third quarter, compared with a loss of 9.9 million in the previous quarter. It said that reflected its investment in staff, infrastructure and technology.

Metro Bank has 27 branches in London and the south east of England with another six under construction. (1 US dollar = 0.6227 British pound) (Editing by Steve Slater, editing by Louise Heavens)