Dáil Éireann Debate, Tuesday - 12 June 2012
229 Deputy Pearse Doherty asked the Minister for Finance if he will set out any targets agreed by him with the pillar banks for lending to the domestic economy and to the small and medium enterprise sector in 2012; and the progress made in meeting these targets. [27959/12]
Amharc ar fhreagraAs the Deputy is aware, the banking system restructuring plan creates capacity for the two Pillar Banks, Bank of Ireland and AIB, to provide lending in excess of €30 billion in the period 2011-2014. SME and new mortgage lending for these banks is expected to be in the range of €16-20bn over this period. This lending capacity is incorporated into the banks' deleveraging plans which allow for repayment of Central Bank funding through asset run-off and disposals over the period to 2013. The Government has imposed SME lending targets on the two domestic pillar banks for the three calendar years, 2011 to 2013. Both banks were required to sanction lending, including lending for working capital purposes, 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 banks achieved their 2011 targets.
In terms of the pillar banks' progress in achieving the 2012 targets, the information reported to my Department and the Credit Review Office (CRO) is commercially sensitive. As such there is limited specific detail that can be divulged on the tracking of the banks' performances. However, Head of the CRO John Trethowan notes in his eighth quarterly report that combined loan sanction levels in quarter one are broadly similar to the figures for quarter one last year. Lending transactions recorded by the two banks in quarter one are 15% lower than quarter one last year. He goes on to state that these numbers are a function of a number of variables:
(i) A softness in demand for lending reported by the banks, and observed by both the Mazars survey and recent Central Bank reporting.
(ii) Borrowers paying down debt rather than seeking new loans.
(iii) The tighter credit conditions in banks.
