Mr. John Moran:

The banks have been set targets and are meeting them. From one perspective one can take it they are doing well. Two years ago, when I first came before the committee and we were examining this issue, we found the banks were not equipped to be able to lend to customers, particularly on a cashflow basis as opposed to more traditional lending based on security. They have done quite a good job. There is always work that can be done, but they have done quite a good job in training staff - and continue to do so - to understand better how to make loans in scenarios where no real estate security is available. This is incredibly important in an Irish context because so many of our new and growing companies are in sectors which are light on real estate.

We have started to divide the population of borrowers into at least three broad categories, namely, microcompanies, larger successful companies with good financial strength and small and medium enterprises still struggling with a legacy debt problem which has come about either because of a real estate venture attached and intermingled with a good company, or because of the company being tied into personal guarantees and a large debt exposure hanging over it. Each category needs different solutions. For microcompanies, we have tried to introduce a microfinance fund-----