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Banking Sector

Dáil Éireann Debate, Tuesday - 15 June 2021

Tuesday, 15 June 2021

Questions (409)

Bernard Durkan

Question:

409. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department continues to monitor changes to the availability of credit throughout Europe; the extent to which Irish banks continue to lend to the various sectors of the economy which now requires a particular level of growth in order to offset any negative influences; and if he will make a statement on the matter. [32091/21]

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Written answers

The Government recognises that SMEs are vital to the Irish economy. As Minister for Finance one of my key concerns is to ensure that SMEs have access to sufficient liquidity, and that access to credit for SMEs is maintained. The Government has announced a range of measures to assist companies deal with the consequences of the COVID-19 restrictions. These include tax measures, as well as loan schemes made available through the Strategic Banking Corporation of Ireland and Microfinance Ireland to assist SMEs. Throughout the pandemic, the network of Local Enterprise Offices have continued to act as a point of contact for businesses around the country, and they can offer advice and support to small businesses, about how best to proceed and what supports are available to them, further information on COVID-19 supports available to SMEs can be found at enterprise.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/.

In regard to lending to the various sectors of the economy, quarterly data are published by the Central Bank in respect of Irish bank lending to SME and large businesses, broken down by economic sector of activity of the business. Data for Q4-2020 can be found at www.centralbank.ie/statistics/data-and-analysis/credit-and-banking-statistics/sme-large-enterprise-credit-and-deposits. The sectoral demand for credit from SMEs is also monitored in the Department of Finance SME Credit Demand Survey. The Credit Demand Survey has consistently shown that whilst SME credit demand has been subdued in recent years the majority of loan applications are approved by banks.

As Minister for Finance I have no function in the commercial decisions made by banks, however SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations centralbank.ie/news/article/regulations-for-firms-lending-to-smes-from-2016 set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers across all sectors. In addition, Credit Review www.creditreview.ie was established to assist those SMEs and farm borrowers from all sectors that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.

In terms of credit availability in Europe, the ECB publishes harmonised data on euro area lending to households and non-financial corporates every month, to the Statistical Data Warehouse (SDW), found at sdw.ecb.europa.eu/. Central Bank of Ireland commentary on developments in euro area credit can be found in the Central Bank’s Financial Stability Review (FSR), which is published bi-annually www.centralbank.ie/publication/financial-stability-review .

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