I am aware of various surveys carried out by ISME. The results of individual surveys from the enterprise and banking sectors can be useful in highlighting the generality of the credit supply issue but they must all be examined in the context in which they are carried out and the methodologies applied.
The banks' recapitalisation package was about securing the long-term health of the economy and about enabling our banks to get back to the business of lending to viable projects and about saving jobs. The package includes many supports for small and medium enterprises, SMEs. The recapitalised banks have committed to increasing their lending capacity to SMEs by 10% over 2008. This should ensure that sound businesses will receive support from their banks. A €100 million environmental and clean energy innovation fund is also being established by each bank as well as a further €15 million each to new or existing seed capital funds. Much of this funding will flow to small and medium enterprises. SMEs are also covered by the code of conduct on business lending to SMEs. This code which was published by the Financial Regulator came into effect from 13 March 2009. The application of the code will promote fairness and transparency in the treatment of SMEs by the banks and should facilitate access to credit for sustainable and productive business propositions. Allied Irish Banks, Bank of Ireland and Ulster Bank will also provide funding for SMEs on foot of €300 million facilities provided by the European Investment Bank to assist developing SMEs.
The recapitalised banks agreed to pay for and co-operate with the carrying out of an independent review of bank lending to SMEs. Additional banks have now participated in this review with the result that the five major lending banks are now included. The purpose of the review is to ascertain the position on credit availability to SMEs here and to recommend appropriate action to improve credit availability. The independent review has now been submitted to my colleague, the Minister for Finance, and will be published shortly. I welcome the completion of this review as it should allow all stakeholders an objective view of the state of lending from the banks to SMEs and provide some clarity on the level of credit being declined.
Arising from the recapitalisation package, the Tánaiste, along with my colleague the Minister for Finance, also established a credit supply clearing group with bank, business (including ISME and SFA) and State representation.
Additional information not given on the floor of the House.
This group is responsible for identifying patterns of events where the flow of credit to viable businesses appears to be blocked and for seeking to identify credit supply solutions relating to these patterns. The group is, however, not an appeals mechanism for cases where credit has been refused by the banks. Individual business decisions remain the responsibility of the banks. The credit supply clearing group is being chaired by my Department and will work to provide a clear picture of any emerging lending patterns while facilitating direct discussion by all the relevant interests in addressing problems. The group met for the first time on 28 May 2009 and will meet again shortly following the publication of the independent review of bank credit.
To assist and complement the work of the credit supply clearing group, I have held seven regional meetings, beginning in Cork on Monday 29 June, to discuss with representatives of business, banks and the State sector, their experience of gaining access to bank credit at local and regional level. I have, to date, held meetings in Cork, Waterford, Dublin, Bundoran, Shannon, Galway and Athlone. The last meeting will be held in Dundalk on Monday next 13 July. In the course of these meetings I met with local representatives of the major banks, business representatives from local chambers of commerce, ISME, SFA, IFA and the Irish Hotels Federation. Local representatives from the various State agencies, such as Enterprise Ireland, city and county enterprise boards and Fáilte Ireland, also attended. The outcome of these meetings should facilitate a greater understanding of the issue at both regional and national levels.
Outside of the banking sphere, my Department's continuous support for enterprises arises through maintaining a positive business environment and through particular interventions from the State development agencies such as Enterprise Ireland, FÁS and the county and city enterprise boards. The significant allocations in my Department's Estimates for 2009 for the development agencies ensures that we can continue to build on this strategy for the future.
The Department has also introduced formal arrangements to reduce the payment period by central Departments to their business suppliers from 30 to 15 calendar days. This commitment has effect on all valid invoices received on and from 15 June 2009 and should help ease cash flow difficulties for SMEs.