Peter Mathews (Dublin South, Independent) | Oireachtas source

SME lending is a function of the resources of the bank. In order to be a healthy lender and supporter of businesses, the bank has to be healthy itself. We actually got estimates from the banks of their capital requirements in March 2010 and again in March 2011 which fell short. We find that the banks, their activities and operations at present are those of zombie or paralysed banks, because the money is not flowing into the economy. The balance sheet repair work is going on. This is not acceptable. Is the information we are getting fully transparent and truthful? Can we believe the witnesses? We are continually hearing reports and figures and the individual microcosmic stories are at variance with the overall figures. That is deeply disappointing.

As regards SME businesses being articulate in presenting the requirements, most of the clients who are good at their business know how to present the requirements and they are the people worth backing. I have come from 20 years of lending to SMEs through ICC Bank, where we got stuck into the businesses of the clients.

It is like being an athlete. If they do not understand what goes into training and preparation then they will not compete and they are probably not a good bet. There are exceptions. However, this idea of the bank being the magic wand or the aunt or uncle to businesses and helping them through does not really wash. My experience is that those in business who really understand their business know in their sleep who their debtors are, what the production costs are, who their creditors and sources of credit are and so on. They may need someone to sit down at a desk and do it but they know the details. There is some disingenuous conversation in this regard.

The deputation referred to the business model of banks. We know from the review of the balance sheets of the banks that prior to 2008 the policy of fractional reserve banking was totally abandoned and that this caused the credit boom and bust and the asset price collapse. I do not have the figures for Ulster Bank but I have them for the six Irish-owned banks. I can do an approximation for Ulster Bank because it was a subsidiary of RBS, whose loan-to-deposit ratio, if we ignore ABN Amro, was approximately 135% - that is, 45 percentage points above the recommended level of 90%. The RBS presence in Ireland is evidentially responsible for 50% of the asset price collapse. It is unfair on the customers who were caught in doing their ordinary business and providing homes for their families. It is unfair for them to be the subject of 100% recovery of loans that were used in the creation of a boom and bust. It is not right and it is not fair. That is the policy. Now the policy-----