Mr. Niall O'Donnellan:

We set up the banking relations department in 2008 in response to the credit crunch. The immediate issue was access to credit of companies that we were dealing with and which were under considerable pressure at that time. The team consists of three experienced executives and we work with our front line. As they are working with individual companies, issues of credit arise in various contexts and the team then interacts with contacts it has established with the banks. In particular we have established relationships with the three primary banks, AIB, Bank of Ireland and Ulster Bank.

We have a central contact point. We have talked about the kinds of issues our companies face. That central contact point is responsible for helping to introduce us to the individual bank account manager who would be dealing with the individual company, obviously with the agreement of the company. We would then engage with the bank on the particular issues that might be facing the company in relation to bank credit and the need for the company to get particular facilities. We would deal each year with approximately 150 companies on that basis. In some companies there would be a number of multiple interactions if they were dealing with a number of different banks. In 2011, we had 190 interactions in that context. Over half of those clients that we would have worked with would have got new facilities. Some would have got restructured and confirmed facilities. There would have been some declines - approximately 20%. Then in some cases the company might have been offered a revised banking loan but would have found it not appropriate to their particular situation. That is our intervention on immediate issues in relation to companies that we work with through the banking relations team.

As we got more involved through the years 2008, 2009 and 2010, we realised that actually there were some bigger issues involved - the issues that are common to all companies in the economy, such as the lack of experience in the banks in actually dealing with business plans, cash flow lending and that kind of issue, the challenges there would be in terms of requests for collateral and so on, the reality of debt overhang on a personal or business basis, particularly coming from the property boom, but that is an inhibitor, if one does not want, to the businesses. All of those are issues that, if one likes, are shared by our companies as well as companies in the rest of the economy.

As we got involved in the discussions with the bank, we also realised that actually the Irish banking system was not fit for purpose for the modern exporting sector - the modern SME exporting sector in particular, and particularly in three respects. First, the Irish banking system had not, actually, become familiar with the modern technology economy so software, for example, was a sector that Irish banks would have very little involvement in up to that period of time. Also med-tech and clean-tech, in other words the new technology sectors, would be areas that they were not familiar with. The second feature was and is the area of new markets. Irish banks would have been lending to companies which were exporting to the UK and that was a reasonably common and comfortable area from a banking point of view. However, once one went beyond the UK and particularly once one went beyond the EU, that then became a more challenging question, if one likes. Obviously in the recent years where the Irish banks have reduced their overseas involvement, that has become an even more challenging issue. Third, there were certain products that are important to exporting companies, such as performance bonds, invoice discounting for software companies and similar types of products that again the Irish banking system would not have been familiar with.

So we have undertaken with the three primary banks in particular, but not exclusively, a programme of work which involves first of all a number of workshops with them in terms of educating them about the kinds of companies we work with and introducing them to various groups of companies: the Irish Software Association; the IMDA - the med-tech association, and so on. Second, we work with them and encourage them to take on people who actually have experience in these areas. For example, in AIB the emerging sectors team is a product of that where they have taken on five or six people who have actually worked in software, VC and so on.

On new markets, we have been working with the three banks, encouraging them to get involved in our trade missions. On some of the missions to China, for example, there have been representatives from the banks. They have also, for the past number of years, participated in our international markets week where they have stalls. The companies can meet them and talk about the financing issues that they have as they are meeting our colleagues from overseas about particular entry into new markets and so on.

Last and by no means least on the question the Deputy asked about facilities, we have been working with them on encouraging them to think about particular new facilities they might be able to offer to innovative and exporting companies. An example of this is that AIB has recently got a risk-sharing facility from the European Investment Bank for up to €80 million. That is particularly aimed at innovative companies in the new sectors as it were. For us that is a very positive and heartening development. We are engaged with particularly the two pillar banks in discussions around how they can use the recently introduced loan guarantee scheme to underpin the kinds of offers they might want to offer the kinds of companies that we work with.

The Deputy asked earlier about some of the issues. Export working capital remains a major issue for our exporting companies as they enter new markets and try to root themselves there. Having the ability to offer flexible terms to new and existing customers and having enough money to spend on the sales forces they need to put into those countries are extremely important. Lack of export working capital is a major constraint on many companies and is a gap in our banking system. We know our companies are in competition with those from other countries with more supportive banks and government-backed risk sharing schemes such as the export credit insurance scheme in Germany and the Export-Import Bank of the United States. We see measures like these as being particularly important, a major priority for the agency and our clients and an input into the action plan for jobs 2013.