Dáil Éireann Debate, Wednesday - 10 March 2010
67 Deputy Martin Ferris asked the Minister for Finance if he will make a statement on the ISME bank watch survey which showed that 55% of businesses were refused funding in the three months to the end of February 2010; and his views on whether this situation is having a negative effect on small and medium enterprise. [11450/10]
Amharc ar fhreagra95 Deputy Pat Rabbitte asked the Minister for Finance if he will comment on the ISME bank watch survey which found that 55% of small to medium enterprises were refused funding in the three months to the end of February 2010; if he will further comment on the general SME lending environment; his views on whether the National Asset Management Agency is unlikely to have a significant impact on the availability of credit to SMEs; if he plans to bring forward further proposals to ameliorate the SME lending environment; and if he will make a statement on the matter. [11657/10]
Amharc ar fhreagraI propose to take Questions Nos. 67 and 95 together.
The second Mazars report on credit availability, published in December, confirmed that while some businesses are facing significant challenges accessing credit, and the SME sector in general is more conservative in its borrowing, nevertheless businesses surveyed confirmed that new lending is still taking place. It is noteworthy that SME businesses surveyed reported a lower level of refusals than claimed by ISME. However, the proportion of refused credit, especially in certain sectors, remains a concern for Government.
I have said before that the banks should be in a better position to lend once the riskiest loans have been removed from their balance sheets and that viable businesses should expect a fair hearing when seeking funding. The banks' balance sheets will be stronger once NAMA has taken over these loans and replaced them with Government guaranteed bonds; this will give the banks greater access to liquidity and make long-term funding cheaper.
To help address concerns over credit availability, under the NAMA Act I will shortly be issuing guidelines to ensure that SMEs, sole traders and farm enterprises will have recourse to an independent, external review of decisions of credit refusal by the NAMA participating banks. I hope that banks not participating in NAMA or covered by the Government guarantee will also decide to join the system. My aim is to have a simple, effective review process, run by people with experience and credibility. The banks must comply with the recommendations of the review process, or explain why they will not do so.
In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help me to decide what further action might be necessary to secure the flow of credit. I intend to publish the analysis from the review process so that the performance of the banks participating in NAMA will be clear to all. Work has been ongoing since December on the logistical aspects of the review system and it is envisaged that reviews will commence shortly.
