Tuesday, 27 May 2014

Ceisteanna (178, 185)

Bernard Durkan

Ceist:

178. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to receive indications from the banking sector regarding the availability of credit throughout the domestic market; if any particular issues have arisen which might indicate a lack of interest in lending by some institutions; the steps required to address this issue; and if he will make a statement on the matter. [23405/14]

Amharc ar fhreagra

Bernard Durkan

Ceist:

185. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which Government policy towards assisting small and medium-sized enterprises by way of enhanced lending for working capital or other purposes has been successful to date; and if he will make a statement on the matter. [23413/14]

Amharc ar fhreagra

Freagraí scríofa (Ceist ar Finance)

I propose to take Questions Nos. 178 and 185 together.

As the Deputy is aware, as part of the 2011 recapitalisation exercise, the Government imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved their 2011 and 2012 targets. I am informed that both banks sanctioned circa €4bn in lending in 2013.

Having completed a process of deleveraging, both AIB and Bank of Ireland are now concentrating on growing their balance sheets.  In this context, both banks recognise the need to increase business lending in the period up to 2016, including lending for working capital purposes, and have put on record their commitment to the SME sector.  Although the targets were a useful policy intervention, the focus now needs to shift towards the collation and examination, on a monthly basis, of more granular data on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector. This focus is further underpinned by the commitments contained in the "Access to Finance" chapter in Action Plan for Jobs 2014. I recently wrote to the banks with a view to ensuring their continued commitment to work closely with my Department in faciliatating a positive business environment in which SMEs can prosper and contribute to economic growth, in addition to maintaining and increasing jobs in this vital sector. In addition, AIB and Bank of Ireland meet my officials on a quarterly basis to keep them abreast of issues pertaining to the SME sector, both in the area of SME lending and distressed SME borrowers.

Last week the Taoiseach announced the establishment of the Strategic Investment Banking Corporation (SBCI). The Government will be prioritising the passage of the enabling legislation through the Houses of the Oireachtas with a view to completion by the summer recess. In the initial phase of its existence the objective of the SBCI will be to improve the availability of credit to the SME sector. To achieve this, the SBCI will operate as a higher tier lender, providing funds to on-lending institutions. On-lending institutions will include Irish commercial banks and could also include foreign banks, specialist funds and other finance houses engaged in lending activities. Credit is the lifeblood of all businesses and SMEs will now be able to access loans of greater duration, with enhanced terms and potentially at a lower cost facilitated by the SBCI and its on-lending partners. This will promote greater competition in the SME lending sector, will encourage economic growth and job creation in this key sector of our economy. I expect the SBCI to be facilitating lending before the end of the year.