Gerald Nash (Louth, Labour) | Oireachtas source

The limit is €150 million. Under the counter guarantee scheme, the lending that can take place to small and medium enterprises is €200 million. The credit guarantee scheme limit and the counter guarantee scheme limit is combined. I have lost my train of thought. I reflected on this earlier but I will reiterate it. Section 4 of the principal Act, entitled power of Minister to give guarantees, contained a number of important elements, including the spread of risk and an effective monetary cap of €11.25 million. That is being increased to take into account the counter guarantee scheme as well. There is a 75% limit on individual loans in subsection (2); a 10% portfolio cap in subsection (3); and a €150 million aggregate limit in subsection (4).

We have changed the equation a little. For example, one of the main findings of the review was that risk elements were disproportionately skewed in favour of the State, so we are sharing the risk across the different institutions. With the inclusion of the Strategic Banking Corporation of Ireland, SBCI, we are allowed to leverage more resources and risk across the various European financial initiatives as well. The Government agreed to increase the 75% and 10% figures to 80% and 13%, respectively. The latter is in line with state aid requirements and as Deputies are aware, there are serious state aid issues relating to how these types of schemes are operated right across the European Union. This is fundamentally concerned with designing it to ensure there is a risk appetite from the financial providers to take on the responsibility of providing more resources to the small and medium enterprise, SME, sector.

The old limit was €11.25 million with respect to exposure of the State but that is now up to €15.6 million. That would be the absolute maximum. By sharing the risk, the bulk of the risk is not now being taken by the State. We wanted to ensure the appetite for taking on this risk was spread more evenly across different agencies and institutions. That will succeed.