Dáil Éireann Debate, Tuesday - 2 December 2014
196. Deputy John McGuinness asked the Minister for Finance the total amount of funds available from the Strategic Banking Corporation of Ireland; when they will be available; the rates that will apply to the bank's loans; and if he will make a statement on the matter. [46078/14]
View answerAs the Deputy will be aware, a milestone in the establishment of the Strategic Banking Corporation of Ireland (SBCI) was marked at a signing ceremony at Farmleigh House on Friday, 31st October attended by the German Minister for Finance, Mr. Schäuble, the Minister for Public Expenditure and Reform, Brendan Howlin T.D., President Hoyer of the EIB and Dr. Schröder of KfW and myself which confirmed the SBCI's funding from our European partners.
The Strategic Banking Corporation of Ireland (SBCI) has been established by the Government as a means of ensuring that SMEs in Ireland are provided with sufficient finance for growth.
The SBCI is funded to the value of €800m of which €150m is from KfW, €400m from the European Investment Bank and €250m sourced from the National Pension Reserve Fund. The NPRF funds are broken down further into a repayable loan from the NPRF of €240m and an equity investment in the name of the Minister for Finance to the value of €10m. After the initial period of operations, the SBCI in conjunction with its funders, will review its funding requirements for its further development.
The SBCI is working with its first lending partners to provide initial funding to the SME sector by the end of 2014. A full roll-out will occur during January 2015 with traditional bank lenders and importantly new credit providers from beyond the traditional bank sector being involved. All of this will allow for the distribution of SBCI funding to the SME sector in Ireland on a prudent basis. The establishment of the SBCI will increase the range of SME funding products such as loans with repayment holidays which will in turn drive demand from SMEs for this type of more suitable financing thereby increasing the size of the SME lending market. The SBCI's lending partners must pass on the lower cost of the SBCI funding to their SME customers and will have to demonstrate this. All lending partners have to demonstrate that all benefits are passed onto SMEs. This is part of their terms and conditions with the SBCI and a feature of the State Aid approval for the operations of the SBCI. The SBCI intends to offer its funding to partner lenders on a non-discriminatory basis to those lenders so that all lenders to SMEs receive the same lower cost of funding. This ensures that SME customers are not penalised for using one finance provider over another. The exact rates applicable have yet to be finalised and will depend to a certain extent on market conditions at the time when the funds are drawn from the SBCI.
