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Credit Availability

Dáil Éireann Debate, Wednesday - 5 October 2011

Wednesday, 5 October 2011

Questions (39)

Bernard J. Durkan


35 Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he or his Department, directly or through the Central Bank of Ireland, has monitored the borrowing requirements of the business sector over the past 12 months on a monthly basis; the extent if any to which the banks have responded positively to such requirements; the discussions if any he has had with both sectors with a view to ensuring an adequate supply of credit in order to provide for an acceptable level of economic growth; and if he will make a statement on the matter. [27609/11]

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Written answers (Question to Minister for Finance)

Both pillar banks provide my Department with monthly figures on balance sheet volumes, sanctioned facilities and geographic and industrial breakdowns of their SME lending. The Deputy may also be aware that under the terms of the Government recapitalisation, both banks also produce a quarterly report which incorporates figures for sanctions and drawdowns by SMEs. The data contained in these reports will continue to be reviewed and analysed by my Department and the Credit Review Office to ensure that the banks are compliant with the terms of the Government recapitalisation as it relates to the provision of credit for SMEs. As the Deputy may be aware, the Government has imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks will be required to sanction lending of at least €3 billion this year, €3.5 billion next year and €4 billion in 2013 for new or increased credit facilities to SMEs.

Both pillar banks have provided me with their plans to ensure that the 2011 target is achieved. This is particularly relevant given the comments contained in the fifth quarterly report of the Credit Review Office, which stated that "it will be a challenge for each of the banks to reach their €3 billion sanction target for new and restructured facilities in the current year."

On the issue more generally of the demand for credit, my Department is in the process of commissioning an independent survey of the demand for credit within the SME sector. The outcome will provide the necessary information to better inform Government policy in this important sector of the Irish economy.

It is vital that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.