I assume the Deputy is referring to the extent to which SMEs seeking credit have been accommodated by their banks. As the Deputy is aware, 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 AIB and Bank of Ireland 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. Both banks have reported that they achieved their 2011 and 2012 targets and the recent Credit Review Office quarterly report commented “both banks are on track to achieve their €4bn loan sanction targets, assuming the pattern of previous years of a strong Q4 performance is repeated.”
AIB and Bank of Ireland are expected to lend to viable businesses both for investment and working capital purposes. The Credit Review Office is available to assist businesses which have been refused credit. The recent CRO report shows that the Credit Review Office upheld the credit appeal in 150 cases or 55% of cases decided. The upheld appeals have resulted in €18.5m credit being made available to SMEs and farms, protecting 1,521 jobs. This shows that there is a strong prospect of success for SMEs going to the Credit Review Office and I would strongly encourage SMEs refused credit to seek a review by the Office.
Taking the data in the recent demand surveys undertaken on behalf of my Department, covering the period April 2011 to March 2013, the average success rate of SMEs in having credit applications approved or partially approved is approximately 74%. It should be noted that there has been an increase in the number of applications fully approved in successive iterations of the demand survey to date. As regards the success or otherwise of SME appeals on bank lending decisions, the twelfth CRO quarterly report, published on 26 September, contains the following information pertaining to Allied Irish Banks and Bank of Ireland:
Banks’ Internal Appeals
|
2010-2013
|
Cases Reviewed
|
Bank Decision Upheld
|
Bank Decision Overturned
|
% Overturned
|
|
AIB Bank
|
686
|
445
|
241
|
35%
|
|
BOI
|
388
|
345
|
43
|
11%
|
|
Total
|
1074
|
790
|
284
|
26%
|
In relation to bank refusals of credit applications, information contained in the most recent credit demand survey, covering the period October 2012 to March 2013, indicate that the main reasons for refusal include:
- Change in bank lending policy
- Inadequate payment capacity
- Account performance/history
- Inadequate security
- Deterioration in business financial performance
If the Deputy is seeking further details in this area, the report is available on my Department’s website at http://www.finance.gov.ie/documents/publications/reports/2013/SMEdemandREDCjun.pdf.
