Dáil Éireann díospóireacht -
Tuesday, 24 Mar 1992

Vol. 417 No. 5

Written Answers. - Enterprise Funding.

John Bruton

Ceist:

121 Mr. J. Bruton asked the Minister for Finance if he will give details of the small and medium size Irish enterprises that have received global loans totalling IR£145,500,000 from the European Investment Bank, the size of these enterprises; the number and details of each case; and the criteria used to qualify for such assistance; and whether the applicants went direct to the European Investment Bank or via a local lending agency.

Minister for Finance (Mr. B. Ahern)

EIB global loans are lines of credit opened to intermediary banks and other financial institutions, which on-lend in smaller amounts for investment projects corresponding to the EIB's financing criteria which are set out in Annex I. EIB makes these loans on strictly commercial terms.

Additional criteria may be operated by the intermediaries concerned. ICC and ACC accounted for the bulk of the loans granted to Irish firms. To encourage investment in small firms the State provided exchange risk cover for these loans confining them to firms with fixed assets of less than £1 million and employing fewer than 100 people.

The EIB has provided the following information: Between 1973 and end-1991, the EIB assisted a total of 1,708 Irish small and medium sized enterprises through global loans totalling IR£148.5 million, as opposed to the figure of £145,500,000 which appears in the question on the Order Paper. The average size loan to individual companies over the period was IR£87,000.

Names and details of specific firms are not available as the loans are negotiated privately through the commercial lending institutions. Annex II gives a size breakdown of enterprises by number of employees and a breakdown of the loans by sector which may also be of assistance.

Intermediaries who administer global loans apply the same eligibility criteria regarding credit worthiness to loans financed under the global loans scheme as they do to their own existing loan facilities.

Under the global loans scheme, funds are only advanced by EIB to the intermediary according as specific projects are identified and approved.

All global loans to Irish firms have been made through intermediaries — detailed breakdown in Annex II.

Annex I

EIB global loans — Eligibility Criteria

Eligible sectors — industry, tourism, and directly related services.

Projects — new fixed asset projects with a capital investment cost of up to IR£15 million.

Size of promoting firm — net fixed assets of up to IR£58 million, 75 million ecus. Employment up to 500.

Finance — up to 50 per cent of project investment cost, lent for between five and 12 years exceptionally 15 years for new hotel development with several years of grace on capital repayments. The currency may be IR£, ecu, EMS currencies or other currencies. The intermediary bank may itself provide additional project finance if requested by the borrower.

Project presentation — the intermediary bank examines the project in detail and presents summary information to the European Investment Bank for final agreement.

Security — negotiated with the intermediary bank.

Interest rate — negotiated with the intermediary bank, based on the cost of funds from the EIB and a margin reflecting relative risk and available security.

Draw down of funds — through the intermediary bank.

Annex II

EIB global loan allocations in Ireland, 1973-1991

A. By size of enterprise

Number of employees	%
under 5	64.0
6-25	24.7
26-100	10.2
over 100	1.1
Total	100.0

B. By main sectors

Sector	Number of SMEs	IR£ million
Metal processing, mechanical and electrical engineering and transport equipment	518	38.6
Agro-Industry and food	260	36.2
Tourism	195	21.2
Woodworking	195	11.1
Chemicals, rubber and plastic processing	150	12.0
Paper and printing	122	11.0
Glass, ceramics and construction materials	93	6.9
Textiles and leather	89	5.2
Other manufacturing	47	3.2
Mining and quarrying	26	1.6
Others and services	13	1.5
Total	1,708	148.5

C. By intermediary institution

Institution/Bank	Number of SMEs	IR£ million
ACC	96	20.4
ICC	1,599	116.9
Bank of Ireland	5	1.2
Allied Irish Banks	8	10.0
Total	1,708	148.5