Dáil Éireann debate -
Wednesday, 8 Jul 1992

Vol. 422 No. 4

Written Answers. - Competitiveness of Irish Banks.

Liam Kavanagh

Question:

50 Mr. Kavanagh asked the Minister for Finance if he will outline the plans, if any, he has to improve the competitiveness of Irish banks so as to provide a better flow of working capital and equity finance for small and medium sized enterprises; and if he will make a statement on the matter.

Minister for Finance (Mr. B. Ahern):

There is already a number of schemes available to help new and existing businesses. In 1989, in response to a ministerial initiative, the commercial banks agreed to provide up to £10 million in loan finance to young entrepreneurs on certain terms. The main feature of these terms is that the loans are at reduced rates of interest and the banks, in addition, do not demand personal security on such loans. The scheme is administered by the individual banks.

In December 1991, in the context of theProgramme for Economic and Social Progress, the four associated banks agreed to provide a further £15 million in loans at favourable rates for the creation or development of small and medium-sized businesses with employment potential. The assessment of individual loan applications is, of course, a matter for the banks.

To date, in excess of £10 million has been lent by the participating banks to more than 220 projects under these schemes. The provision of working capital and equity finance for small and medium sized enterprises is a commercial matter for the individual banks concerned. However, I am glad to note the recent initiative by the Small Firms Association in securing a particular scheme for its members with one of the main banking groups.

As for the competitiveness of the banking sector, the legislation put through by the Government in 1989 on the Building Societies and Trustee Savings Banks and the recent ACC Bank legislation, and the proposed ICC legislation will increase the competitive pressures on the banking sector to meet the needs of their customers. The regulations giving effect to the EC Second Banking Directive will open up the Irish market to further EC competition. These regulations are to be made later this year. I have repeatedly exhorted the banks to act in a positive way to assist Irish business and I will be keen to monitor the banks' ongoing response in this area.