Dáil Éireann Debate, Tuesday - 3 July 2012
183 Deputy Dominic Hannigan asked the Minister for Finance further to Parliamentary Question No. 163 of 28 February 2012, if he will provide an update regarding banks lending to small and medium enterprises; and if he will make a statement on the matter. [31641/12]
Amharc ar fhreagraAs I stated in my reply to PQ 163 of 28 February 2012, 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 next three years. 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.
The Credit Review Office (CRO) reviews decisions by the pillar banks to refuse, reduce or withdraw credit facilities (including applications for restructured credit facilities) from €1,000 up to €500,000. The Credit Review Office is overturning 60% of the decisions referred to them, supplying €6.9m of credit, supporting 683 jobs in the SME sector. I would appeal to SMEs who have been refused credit by banks to avail of the services of the CRO.
In terms of the pillar banks' progress in achieving the 2012 targets, the information reported to my Department and the 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.
The Deputy should be aware that the Microenterprise Loan Fund Bill was published on 22 June and my colleague the Minister for Jobs, Enterprise and Innovation is taking the legislation through the Oireachtas at present. The scheme, which is expected to be operational from early Autumn, will facilitate up to €40million in additional lending to microenterprises over the next five years. Furthermore, the Government is in the process of facilitating up to €150m per annum of additional credit through the Temporary Partial Credit Guarantee Scheme, designed for SME's who, because of lack of collateral or because of the specialised sector they operate in, face difficulties in accessing bank credit.
