Skip to main content
Normal View

Strategic Banking Corporation of Ireland Remit

Dáil Éireann Debate, Tuesday - 2 December 2014

Tuesday, 2 December 2014

Questions (197)

John McGuinness

Question:

197. Deputy John McGuinness asked the Minister for Finance the category of loans that will be provided for by the Strategic Banking Corporation of Ireland; if funds will be provided for machinery, cash flow, building and land development or the re-financing of other borrowings; and if he will make a statement on the matter. [46079/14]

View answer

Written answers

As the Deputy will be aware, Section 8 of the Strategic Banking Corporation of Ireland (SBCI) Act 2014 mandates the SBCI to design credit facilities that meet the needs of SMEs. The SBCI will take account of market conditions for SME financing as part of its operations. If SMEs are having difficulty in particular sectors, the SBCI is mandated to design products which address any such difficulties. In this way the SBCI can facilitate the provision of sufficient prudent finance to fund the commercial activities of SMEs throughout the economy.

Initially, the SBCI will facilitate the offering of financial products that can be used for both investment and working capital needs. These products will be subject to de minimis state aid constraints. Capital investment, for example, for the purchase of machinery will be for new investments. The SBCI's working capital product provides greater certainty for firms managing their cashflow as it will be offered with a minimum commitment of two years.

In general SBCI funds should not be used for the refinancing of existing loans. However, in the specific case of loans of banks that are exiting the Irish SME finance market, the SBCI is examining how it could provide funding to lending partners so that they might help SMEs facing the potential critical difficulty of having their finance withdrawn.

The legislation gives the SBCI a broad mandate to supply credit wherever firms experience problems in financing their activities, initially the SBCI will focus on SMEs regardless of their sector. However, the SBCI's funders have some restrictions on the final destination of their loans. For example, it was a precondition of KfW's financing that none of the €150m forwarded would go towards speculation on property development. Indeed, it is a general policy that the SBCI will not finance pure speculation in property. It should be noted that businesses within the construction sector, such as electricians and plasterers for instance, can of course be funded.

Top
Share