John McGuinness (Carlow-Kilkenny, Fianna Fail) | Oireachtas source

Concern has been raised at this committee, particularly from the small and medium-sized enterprise, SME, sector, about restructuring units within AIB and Ulster Bank. The unit in Ulster Bank came into focus first. Some loans that were sold on were performing loans. It has been found that the loans are now mixed up under the name of one particular fund. There may be a number of portfolios in that fund that actually represent competitors. There may be two or three portfolios, let us say they are hotels for example. They all represent hotels but they are three different portfolios. The management of the fund relative to the loans is such that the performing loan is put under pressure because the vulture fund wants to get a different outcome. Let me finish painting this scenario for the witnesses. In other words, it may very well want to amalgamate all the portfolios and sell it as one but it has a performing loan that makes it difficult to sell. The fund management is using its muscle and this is anti-competitive. It is forcing the performing loan in a particular direction. I refer to a scenario in which the entity responsible for the loan, or which owes the loan, takes an action such as going to the Central Bank. As the Central Bank does not deal with individual cases - which I understand - that entity would be referred to the financial services ombudsman. Because the turnover of that entity is greater than €3 million, it has nowhere to turn but to the courts. To take a case to court against one of the vulture funds, which may be owned by Goldman Sachs or whoever, is simply not possible for an SME of that size. In the context of the Government asking the Central Bank if more legislation is needed, would Professor Lane perhaps consider that issues such as this require a different view regarding legislation? In Europe, an SME is defined as having a turnover of €50 million. In Ireland it is €3 million. When the Central Bank is asked by the Minister or by this committee if it needs stronger legislation, would Professor Lane consider recommending a change in legislation or regulation around that area of SMEs? Does the Central Bank want to go that far in its recommendations or not?