Dáil Éireann Debate, Wednesday - 20 March 2013
192. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he has received communication from the banking sector with a view to ensuring that small and medium sized enterprises have ready access to working capital as required; and if he will make a statement on the matter. [14251/13]
View answer193. Deputy Bernard J. Durkan asked the Minister for Finance if he will ensure the availability of adequate credit facilities following his discussions with the hotel and tourism sectors; and if he will make a statement on the matter. [14252/13]
View answer194. Deputy Bernard J. Durkan asked the Minister for Finance if any particular attention has been paid to the vacuum left in the lending sector in the wake of the withdrawal of a number of banks from this economy with particular reference to any such lending institutions still operating in this jurisdiction but controlled from outside the island of Ireland; and if he will make a statement on the matter. [14253/13]
View answerI propose to take Questions Nos. 192 to 194, inclusive, together.
The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.
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 in 2012 and €4 billion in 2013 for new or increased credit facilities to SMEs. As the Deputy will be aware from my reply to his questions on 28 February, the Credit Reviewer said in his most recent quarterly report that “Both banks have achieved their €3.5bn SME loan sanction targets. Over €8bn was sanctioned in 2012; of which approx. €2.5bn (27%) is new lending drawn down.” According to the Credit Review Office, the balance of the sanctioned lending represented restructured or refinanced credit to SMEs. The Credit Review Office in the past has noted that this is important in terms of sustaining the businesses and the associated jobs.
In addition to the lending targets imposed on the banks, the pillar banks are required to submit their lending plans to the Department and the Credit Review Office (CRO) at the beginning of each year, outlining how they intend to achieve their lending targets. The banks have submitted their lending plans for 2013 to my Department. My Department, in conjunction with the CRO, has analysed the plans and has met with the banks to discuss them. The banks also meet with the Department of Finance and the CRO on a quarterly basis to discuss progress. The monthly management meetings with the pillar banks also provide a forum for the issue of SME lending to be raised by the Department. My officials and I will engage robustly with the banks to ensure that they meet their 2013 targets. The pillar banks report to my Department and to the Credit Review Office on credit on a sectoral basis but this is commercially sensitive information and I am not in a position to release it.
My Department’s review of 2012 is available at http://www.finance.gov.ie/viewdoc.asp?DocID=7609&CatID=45&StartDate=01+January+2013. It contains details of some of the actions taken in 2012 including demand surveys, ongoing consultation with the SME sector, initiatives with the banks, the Credit Review Office review and increase of its resources and NPRF funds for the SME sector.
Access to Finance for SMEs is a key aspect of the Action Plan for Jobs 2013. It is the Government’s vision that all viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs, in a manner that supports growth and employment in the economy.
The SME State Bodies Group was established in 2012 to both develop key policy initiatives to support SME access to credit and other forms of finance, and to ensure their implementation. It will continue in 2013 to engage intensively in proactively addressing issues associated with SME funding and financing in conjunction with the relevant stakeholders through the SME Funding Consultation Committee. My officials also meet frequently with additional stakeholders who wish to contribute to policy development in relation to access to finance.
I have previously acknowledged that having only three main banks lending to the SME sector is not an ideal situation. The Government has taken a number of actions, particularly where SMEs have been refused credit, to improve the situation in relation to credit availability to SMEs. Ultimately, it is the many actions which this Government is taking to normalise the Irish banking sector such as the cessation of the Eligible Liabilities Guarantee Scheme together with the recovery of the economy which will attract new participants to lend in the SME sector.
