Dáil Éireann Debate, Thursday - 2 February 2012
81 Deputy Michael McGrath asked the Minister for Finance his views on the extent to which covered institutions are meeting lending targets in terms of actual amounts of loans drawn down rather than loans approved, given that many approvals are made with onerous conditions which may result in the prospective borrower withdrawing the application; and if he will make a statement on the matter. [614 4/12]
Amharc ar fhreagraI presume the Deputy is referring to business lending in this instance. As the Deputy is aware, the Government has imposed lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both have indicated that they have achieved their 2011 targets.
I should stress that the targets are for approvals of credit, targets have not been imposed for drawdowns. I would point out that the drawdown of funding is at the discretion of the borrower. There are many factors affecting whether or not funding is drawn down, such as changes in market conditions or company restructuring. The recent Mazars Survey of SME Lending, conducted on behalf of my Department, found that the most frequently cited reason for not availing of approved credit was "not needed at present time".
In terms of loan approvals with onerous conditions, if a borrower believes that the bank has attached terms and conditions to a loan such that the loan cannot be accepted then the borrower should ask for the decision to be appealed through the bank's appeals process. If that appeal is unsuccessful, then the borrower can apply for review to the Credit Review Office.
The Mazars Survey found that in 4% of approved application cases the respondent noted that the criteria/conditions attaching to the credit approval prevented them from availing of the sanctioned facility.
The Mazars Survey is available on the Department of Finance website: http://www.finance.gov.ie/documents/publications/reports/2011/mazarbanklend.pdf.
