Dáil Éireann Debate, Tuesday - 7 March 2017
149. Deputy Pearse Doherty asked the Minister for Finance his views on whether the banking sector is playing a full role in lending to builders in order that housing construction can reach the levels required to meet the need; the engagements he or his officials have had with the banking sector on this issue; and if he will make a statement on the matter. [11223/17]
View answerAs the Deputy is aware, small and medium sized businesses (SMEs), including those in the construction sector, play a central role in the sustainable recovery of the Irish economy. Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.
The Deputy will also be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products and lending as determined by the banks.
The Government is committed to ensuring that all viable businesses operating in Ireland have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. As the Deputy will be aware, Section 3.5 (Ensuring Finance for Growth) of the Action Plan for Jobs 2017 (APJ) sets out a range of commitments to ensure viable SME's can access appropriate finance at a reasonable cost from both bank and non-bank sources.
In line with Action 62 of the APJ 2017, officials from my Department collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.
It should be noted that the results of the most recent Department of Finance SME Credit Demand Survey, covering the period April to September 2016, show that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Demand for credit remains subdued and the latest survey shows only 39% of SMEs in the construction sector requested bank finance in the previous six months a decrease of 9% from September 2015. Furthermore, the main reason for not applying for bank finance is that SMEs do not need it (86%). Further results from the survey can be found atwww.finance.gov.ie/what-we-do/banking-financial-services/sme-credit-lending.
I note that the data recently published by the Central Bank of Ireland for Credit Advanced to Irish Resident Small and Medium Sized Enterprises shows that new lending to the Construction sector (construction of buildings carried out on contract) for Q1 to Q3 2016 totalled €59 million compared to €50 million for Q1 to Q3 2015. New lending to Property Investment / Development enterprises for Q1 to Q3 2016 totalled €961 million a growth of €582 million (c. 154%) when compared to the same period in 2015. This data can be found in Table A.14.1 Credit Advanced to Irish Resident Small and Medium Sized Enterprises published on the Central Bank's website.
Separately, the Deputy may also wish to note that the Ireland Strategic Investment Fund (ISIF) has been actively involved in a number of important initiatives which enhance the availability of finance to the construction sector in line with the terms of the Fund's mandate. This includes its investments in:
- Activate Capital - which is an innovative non-bank financing platform that has the potential to provide funding for substantial numbers of new homes in Dublin and the other major urban centres in which demand is most pronounced;
- Ardstone Residential Partnership - which is a residential equity investment fund that is focused on delivering residential units to the market over the short-to medium-term; and
- Wilbur Ross Cardinal Commercial Real Estate Mezzanine Debt Fund - which has funded a number of residential developments in recent months.
The Government remains committed to the SME sector, including those involved in the construction sector, and sees it as the key engine of ongoing economic growth. I can assure the Deputy that my Department, working with other relevant Departments, Bodies and Agencies, such as the Credit Review Office, will continue to advance policies to ensure the availability of both bank and non-bank credit so as to ensure that viable Irish SMEs have sufficient access to finance.
