Dáil Éireann Debate, Tuesday - 8 July 2014
208. Deputy Mattie McGrath asked the Minister for Finance the loan amount the Strategic Banking Corporation of Ireland, SBCI, has advanced to Irish small and medium-sized enterprises; the amount of funding the SBCI has received from the German Development Bank, KfW; and if he will make a statement on the matter. [29761/14]
View answerAs the Deputy will be aware, the Taoiseach and Chancellor Merkel last year sought, when we were exiting the EU/IMF Programme, to 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 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.
A working group comprising of officials at my Department and staff of the National Treasury Management Agency have worked quickly to investigate ways to ensure that the benefit of this cooperation to Irish SMEs can be maximised. In order to have the SBCI operational as soon as possible, the group are working in a number of areas to close agreements with Kreditanstalt für Wiederaufbau (KfW) and the European Investment Bank. Both KfW and the European Investment Bank have indicated that they are willing to provide lower cost funding to SBCI for up to a 10-year term. Locking in funds at a lower cost for a 10-year period is both a major benefit and a risk mitigant for SMEs. To have locked in lower cost funding would be a major benefit in such circumstances and this fact should provide considerable confidence to the SME sector as it increases the certainty of funding to that sector even in adverse financial market conditions.
A key benefit of the SBCI will be its ability to facilitate loans with initial capital repayment breaks or the offering of loans with longer durations than are typically available currently. In such cases, SMEs would have greater capacity to make investments on the basis of improved cash flow matching, which makes growth more likely. Additionally, the expanded pool of lending products could serve the needs of a wider cohort of SME customers than is presently served by the lending institutions.
The establishment of the SBCI will provide in total over €500m of additional credit for SME s and will be a great addition to the SME credit landscape in Ireland. This will promote greater competition in the SME lending sector, will drive economic growth and job creation in this key sector of our economy. The Government will be prioritising the passage of the required legislation through the Houses of the Oireachtas and I expect the SBCI to be facilitating lending before the end of the year
