Dáil Éireann Debate, Tuesday - 19 November 2013
176. Deputy Dara Calleary asked the Minister for Finance his views on the recent report of the Credit Review Office; the implications of the continuing difficulties for companies accessing credit; and if he will make a statement on the matter. [42728/13]
View answerIn his most recent quarterly report, the Head of the Credit Review Office observed that “the remaining banks continue to lend to low/medium risk credit applications” but that “credit reviewers see too many cases which may not ‘tick all the boxes’ on current bank lending policies and criteria, but are still bankable propositions”. The report states that “while a sizeable minority of enterprises face some form of financial challenge” it expects “the banks can ensure that adequate finance should be made available to support business and associated employment”.
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 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 achieved their 2011 and 2012 targets.
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 in credit being made available to SMEs and farms, protecting 1,521 jobs. In the recent Budget I increased the CRO appeals threshold from €500,000 to €3 million and I would strongly encourage SMEs refused credit to seek a review by the Office.
The Government has taken a number of actions to improve the situation in relation to credit availability to SMEs. The range of credit options available to SMEs now include the Microenterprise Loan scheme which can facilitate up to €40million in additional lending to microenterprises over the next five years. In addition, the Credit Guarantee Scheme is designed for SMEs who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
The SME State Bodies Group develops key policy initiatives to support SME access to credit and other forms of finance and ensures their implementation through the annual Action Plan for Jobs. It has continued 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.
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.
More generally, small businesses can benefit from support, guidance and advice provided at local level through the network of County Enterprise Boards which are currently being transformed into Local Enterprise Offices with closer links to businesses in their local area.
As the Deputy will be aware, the Taoiseach mentioned in this House last week that he had held discussions with Chancellor Merkel. Germany is keen to help and specifically to find ways to reinforce Ireland’s economic recovery by improving funding mechanisms for the real economy, including access to finance for Irish SMEs. The German Government has asked KfW, the German development bank, to work with the German and Irish authorities swiftly, in order to deliver on this initiative at the earliest possible date.
Officials of my Department have already exchanged working papers on this subject with KfW and the German Ministry of Finance. We have held consultations with the German embassy in Dublin which helped pave the way for discussions with the German Ministry which are being held in Berlin today and further discussions will be held with KfW and other key stakeholders over the coming weeks both here and in Germany.
I am keen to see the establishment of a healthy and balanced relationship. As we are trying to ensure that any initiative that comes out of this process is as effective as it can be, we will be discussing approaches that meet the strategic objectives of both States.
Question No. 177 answered with Question No. 174.
