Mr. Michael Spellman:

We have spent a great deal of time on the issue of credit, including speaking to members on the reason there should be a no credit policy. If operators in the business of exporting cannot obtain sufficient facilities from their banks to carry on their businesses, where banks have access to their securities and know everything about them, why should marts give them credit? This has been an issue of serious concern for us for a number of years.

Deputy McNamara raised questions about the PRSA and credit. In licensing any mart the main concern and requirement of the PRSA is that the client account be in credit at all times. There cannot be a deficit at any time. This means that if a mart does business to the tune of €500,000 on any auction day, it must have €500,000 in its client accounts before issuing cheques. Obviously, any mart that has afforded credit to a company or any other customer will have done so in the full knowledge that it can withstand the consequences. All livestock marts - I speak definitively about co-operative livestock marts - are managed by boards or committees of management made up of responsible mature people who would not give credit to any customer if they thought they could not withstand it. We have been extremely concerned about this issue and will continue to enforce the stance that there has to be a no credit policy. That is how it should be.

Reference was made to the fact that a customer was paying €50 over the odds for stock. Why should that customer be afforded a credit line when an ordinary farmer client wishing to purchase stock is required to pay before collecting the stock and leaving the mart? It is totally unfair.

With regard to credit insurance, we investigated this issue a number of years ago. The reality is that putting credit insurance in place for anyone dealing with a mart would cost more than what the mart would get in commission. A mart putting in place credit insurance would be a non-runner.

To put matters in context, the main topic of the 37 meetings held from January 2009 to 9 October last was credit. We have been and remain very concerned about this issue.

The question was asked as to the reason the HSBC had appointed a receiver. It is fairly well known that the company concerned was operating on the basis of invoice discounting and that the bank was aware of its exposure. My understanding from the receiver is that in the past four to six months it was not meeting its commitments. For this reason, the bank had to become involved. I do not think it came as a surprise when it moved when it did. It might have been better for many of us if the bank had moved sooner.