Tuesday, 19 February 2013

Questions (235, 236)

Bernard Durkan

Question:

235. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has had discussions with the hotel industry with particular focus on the level of indebtedness and the way in which this might affect the efficient operation of the sector; if any endeavours have been made to identify the degree to which the lending institutions are willing to meet the on-going or day to day credit requirements of the industry; and if he will make a statement on the matter. [8893/13]

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Bernard Durkan

Question:

236. Deputy Bernard J. Durkan asked the Minister for Finance if he has studied the effect of the withdrawal of a particular bank from this jurisdiction resulting in the creation of some serious difficulties for the hotel sector; if he has had any discussions with the stakeholders in this regard; and if he will make a statement on the matter. [8894/13]

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Written answers (Question to Finance)

I propose to take Questions Nos. 235 and 236 together.

My officials and I meet with many stakeholders in relation to issues within the remit of my Department and I can confirm that the issues of the level of indebtedness in the hotel sector and credit availability to the sector have been brought to my attention.

The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets.

The pillar banks are expected to lend to viable businesses in all sectors of the economy, including the hotel sector, and to address the needs of SMEs in financial difficulty. The Credit Review Office is available to assist businesses which have been refused credit. The withdrawal of a particular bank from this country is regrettable because it reduces competition in the provision of credit to the economy. However, in his most recent quarterly report, the Credit Reviewer stated that

"I have observed no geographic region or trade sector being relatively adversely affected by this contraction in these two banks. This may be due to restructuring their own legacy books and refinancing other banks’ lending as the Central Bank reports show contraction in drawdowns in some sectors such as hospitality and retail."

The Credit Review Office is currently overturning 55% of the refusal decisions referred to them and anyone who has been refused credit by the banks should avail of the services of the Office.

Last month, the National Pensions Reserve Fund (NPRF) announced investment commitments in a suite of three new long-term funds which will provide equity, credit and restructuring / recovery investment for Irish SMEs and mid-sized corporates. The NPRF is also currently reviewing additional SME funding opportunities that would complement these commitments, with the objective that the eventual suite of funds would have the capacity to invest across the full spectrum of SME financing needs. The NPRF specifically stated that its SME Credit Fund may acquire and refinance loans close to maturity where existing lenders are not willing to provide new lines of credit.