Ciarán Lynch (Cork South Central, Labour)
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We are here to discuss matters relating to credit provision. I welcome Mr. John Trethowan, head of the Credit Review Office. The form of the meeting will be that Mr. Trethowan will make his opening remarks and we will follow up with a question and answer session. I remind members, witnesses and those in the public gallery that all mobile phones must be switched off.

I advise the witness that by virtue of section 17(2)(l) of the Defamation Act 2009, he is protected by absolute privilege in respect of his evidence to the committee. However, if the witness is directed by the committee to cease giving evidence in regard to a particular matter and he continues to do so, the witness is entitled thereafter only to a qualified privilege in respect of his evidence. He is directed that only evidence connected with the subject matter of these proceedings is to be given and is asked to respect the parliamentary practice that, where possible, he should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I understand this is the first time Mr. Trethowan has appeared before the committee. I thank him for attending and look forward to engaging with him. I invite him to make his opening statement.

Mr. John Trethowan:

Good afternoon. The Credit Review Office will have been in existence for three years on 1 April next. It was part of a range of measures introduced by the Government to assist SMEs and help banks to continue to lend into the Irish economy. There are no silver bullets among these various initiatives, which include the Credit Review Office, and the office should be viewed as part of a toolkit to help small businesses. If there was a silver bullet, it would be domestic demand - that is, when people start spending and raising the turnover of SMEs.

The performance of the Credit Review Office was recently reviewed by Grant Thornton as part of the Action Plan for Jobs 2012, and it was found to be effective in providing support for the sector. To date, we have dealt with approximately 250 requests and appeals, split roughly 50:50 between the two pillar banks. This has resulted in some 55% of the appeals being upheld, with credit subsequently being advanced.

In the process, we have protected about 1,100 jobs in making that finance available. Each appeal typically takes 15 to 20 hours from receiving it in the review office to carrying out the research, writing up the appeal and submitting it to the banks. While the number of appeals is modest, the two main banks which are part of the process do not know which of the SME borrowers with whom they are dealing may at some point come to us. Thus, although the numbers are small, we have a beneficial impact across the board on bank behaviour.

The appeals also provide empirical evidence to allow me to make a commentary on both the supply side and the demand side of the economy. To date, I have issued ten reports to summarise those findings and to inform policy makers and the market on lending conditions. I believe the Chairman received a copy of the last one, which was issued last week.

Ciarán Lynch (Cork South Central, Labour)
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What I propose is that we engage in 12-minute sessions and then go around from there. In respect of the credit that businesses, including SMEs, are seeking, we hear much anecdotal information. Business owners contact Members of the House, and we might read material in the newspapers. What I hope to get this afternoon is some fixed information from Mr. Trethowan.

The public would assume that the nationalised banks are obliged to be transparent in how they deal with the lending process for SMEs. Could Mr. Trethowan expand on how that review procedure is dealt with when somebody arrives with a complaint?

Mr. John Trethowan:

The first thing we do is to seek information from borrowers on their situation. That includes looking for their financial accounts and any business plans they have. We will speak with borrowers regarding anything we can do to help them. My reviewers will typically talk to them on the phone, or visit. We also ask the banks for their reasons for declining and their views on the customers concerned, because there are always two sides to every story when one starts to research this. The reviewers then go away and try to find solutions to the borrowers' problems. In some cases, particularly with businesses that have invested some reserves into, for example, buy-to-let properties, such as a number of apartments, one must try to disaggregate the failed investment from the current business. In doing so, we can sometimes make a case for the core business to be supported and for the property debt to be parked.

Ciarán Lynch (Cork South Central, Labour)
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In Mr. Trethowan's investigations, does a set pattern arise? Are particular banks causing difficulty when people come in, or is it banks in general against which they are making complaints?

Mr. John Trethowan:

We are only empowered to deal with the two pillar banks. We were set up under the National Asset Management Agency Act but, under NAMA, it is only AIB and Bank of Ireland that are lending to SMEs at the moment. I meet periodically with Ulster Bank and have dealings with it from time to time, although not formally. It means we are basically just overseeing the activities of the two banks. There are only three banks lending to SMEs in this market.

Ciarán Lynch (Cork South Central, Labour)
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Are the banks engaging in any measures to advertise that credit is available, and is the office also monitoring that?

Mr. John Trethowan:

I understand that both banks have extensive programmes in place, such as enterprise weeks, so that SMEs know they are open for business. In my reports, I reflect that low to medium-risk businesses are getting credit from the banks. The issue lies with the more challenged SMEs we have as a result of the downturn.

Ciarán Lynch (Cork South Central, Labour)
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According to the figures provided to us by Mr. Trethowan, he reviewed 496 cases relating to AIB, upholding the bank's decision in 316 cases and overturning the decision in 180 cases, which means that 36% of cases were overturned. Likewise, with Bank of Ireland, he reviewed 288 cases and upheld 271, meaning that 17 were overturned, which equates to 6%. That indicates that the bank's decisions have been correct in most cases.

Mr. John Trethowan:

To clarify, that table relates to the internal appeals within the banks, before borrowers come to the review office. When setting up the process, we said we would not deal as a first port of call with SMEs. They have the right of appeal within the two banks - and, indeed, Ulster Bank has adopted that system as good practice - so that one has a second pair of eyes in the bank. That is what those statistics refer to.

We have handled 215 appeals that have come to the review office. Of those, we asked the bank to make the loan in 120 cases and upheld the bank's decision in 95 cases, so the figure for overturning banks' decisions is about 57%.

Ciarán Lynch (Cork South Central, Labour)
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I will move on to the Mazars report and the debate about how SMEs are performing. That report showed that Irish banks have the second lowest approval rating in the EU.

Mr. John Trethowan:

I reviewed the Central Bank report that the Mazars report came from because I knew this issue would be raised today. I will not criticise the Central Bank report or any other commentary on this but I will observe a few things about the tables in the report. The main table shows the number of rejections. All of the countries that have been subject to interventions and assistance are in that table. One must take account of the economic background of a country before one can assign league tables. Ireland lies just above Greece and just behind Spain, Portugal and Italy, all of which have their difficulties at the present time. Ireland's trend is decreasing as the amount of rejections declines, while all the other countries show increases since the previous survey. I guess that is because Ireland was first into the bank restructuring and economic constraints, so we might be further through the cycle than the others. It is an interpretation one could take.

Ciarán Lynch (Cork South Central, Labour)
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Twenty percent of the SMEs that were dealt with sought non-banking credit. One might think this contradicts what Mr. Trethowan is telling us. Why are they seeking non-banking credit instead of going to the banks?

Mr. John Trethowan:

This is an area about which I would worry. I have explained in previous reports that because businesses, rightly or wrongly, perceive that it is difficult to get bank credit and are keen to do business and get turnover, they have been extending numbers of days out and taking trade credit, so it is almost a secondary banking system. That concerns me slightly because if a business starts to go down and has a large creditor book, all of the other businesses that have lent it money in effect will take a hit as a bad debt. In Northern Ireland, we recently lost a large, long-established and well-respected building firm that left £15 million of debt behind it and a number of sub-contractors have gone down as a result of that.

Ciarán Lynch (Cork South Central, Labour)
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Could Mr. Trethowan give us a profile of the types of company that are looking for credit at the moment? Some companies may not be seeking credit but are trying to restructure or consolidate their debts. Is there a particular profile of businesses that are out there seeking credit? Are they in a particular sector, such as retail or IT? Are they medium-sized companies or small, owner-occupied companies?

Mr. John Trethowan:

The limit is €500,000, so we are confined to dealing with companies in the micro- and small business sectors. People who are starting out in business tend to come to us. This is because banks were never the source of seed capital. When they come to us, we direct them to the microenterprise loan fund and also to the CEBs for mentoring. This is a risky time to be starting a business. There are always risks in the first two years in which any business is in operation. We seek to have those to whom I refer mentored and supported. Outside of that, we meet those whose businesses have had it tough in the context of both low turnover and low demand and have lost their profitability. Those businesses may perhaps be constrained from using the reserves they built up in the Celtic tiger years because they invested these in buy-to-let properties and things of that nature.

Ciarán Lynch (Cork South Central, Labour)
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Is there a particular type of business that approaches the office?

Mr. John Trethowan:

No; businesses are from across most of the sectors. I have learned a great deal about various businesses during the past three years. This is because we are obliged to try to understand both the business model and the nature of the business involved.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome Mr. Trethowan. It is always impressive when a witness comes before the committee alone and is not surrounded by a team of officials. I know Mr. Trethowan does not have such a team in any event.

Paul Coghlan (Fine Gael)
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Mr. Trethowan has confidence. He does not need a team of officials.

Michael McGrath (Cork South Central, Fianna Fail)
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Absolutely. Mr. Trethowan's office does some very good work. The various reports it has issued have helped to provide a better understanding of the issue of credit and the various factors that are at play in respect of it. The number of appeals the office receives remains disappointingly low. Given the fact that well over 50% of the appeals Mr. Trethowan considers are upheld and that he recommends that the banks' original decisions in such cases be reversed, is this not conclusive proof that the banks are getting it wrong in many instances and are not really meeting the needs of the economy? Of course, I refer here only to the cases that come before Mr. Trethowan. In over half of these he finds that the banks got matters wrong.

Mr. John Trethowan:

In the report that was issued I outlined my concerns in respect of the banks' risk thresholds. I also acknowledged that the banks are lending to low and medium-risk SMEs. The latter are getting cash without many problems. The challenge lies with more distressed SMEs which could still be viable, either now or in the future. It is a struggle for such businesses to obtain credit. I am of the view that the banks could do a great deal better in respect of the process by means of which people access credit. At various meetings I attended during the past six months it emerged that in addition to the credit decision that was made, the experience of those involved was poor. The report indicates that the process has three stages. To a large extent, the first of these stages involves order-taking in respect of applications for amounts up to €250,000. A decision on such applications is taken remotely in Dublin, generally in a credit factory and by means of credit scoring. Then a letter - taken from a previously prepared menu of such letters - is sent out. A Red C survey indicated that 78% of people disagree with the reason for rejection listed on their letters. There is a lot more that could be done in this regard. Perhaps this is part of the reason people say banks are not lending. They may just have had a bad experience.

Michael McGrath (Cork South Central, Fianna Fail)
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I accept that. My point is that the high level of successful appeals should be a cause of great concern. It is a vindication of the work Mr. Trethowan's office is doing but it is also a measure of the failure of the banks to deal with credit applications fairly. So many more credit decisions which would have similar characteristics to those upon which he is adjudicating are just not arriving on Mr. Trethowan's desk. My concern is that the work of his office represents only the tip of the iceberg in the context of the problems people are experiencing in obtaining credit. The fact that almost 60% of appeals are being upheld should really set alarm bells ringing in the context of how the credit functions within banks are operating.

Mr. John Trethowan:

I agree with that. As we move into a period when, hopefully, better times are coming and during which the demand for credit will rise past where it stands now, it will be important for banks to meet the needs not just of low and medium-risk businesses but also the more challenging ones.

Michael McGrath (Cork South Central, Fianna Fail)
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The overall figures relating to the two pillar banks for 2012, which are contained in Mr. Trethowan's most recent quarterly report, indicate that these banks have met their SME loan targets of €3.5 billion. The report also indicates that over €8 billion in credit was sanctioned in 2012 and that €2.5 billion of this was new lending that was drawn down. How much of the €8 billion - some of which related to loans that were rolled over or restructured - was drawn down?

Mr. John Trethowan:

I must be careful not to give away any commercially sensitive information when answering the Deputy's question. Last year there was new lending of approximately €2.5 billion. The remainder related to restructuring and refinancing. Restructuring involves rolling over existing loans in order to ensure that businesses continue in credit. On refinancing, because only three banks are actively engaged in lending, where borrowers require new money they can no longer go to IBRC and nor can they approach Bank of Scotland Ireland. It is very important that this refinancing activity brings borrowing from those balance sheets onto the balance sheets of the banks here. I had a meeting with representatives from one of the banks this morning and they informed me that while it is sanctioning refinancing moneys, these are slow to come across. The main thing is to have these sanctioned but the actual draw-down is taking somewhat longer.

Michael McGrath (Cork South Central, Fianna Fail)
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Of the €8 billion sanctioned, how much was drawn down?

Mr. John Trethowan:

Approximately €2.5 billion.

Michael McGrath (Cork South Central, Fianna Fail)
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Does that relate to new lending or does it relate to restructuring or roll-overs that have not been drawn down?

Mr. John Trethowan:

There is a small amount of new restructuring in that. I do not have a figure for refinancing but I do have figures for new lending. In addition, there was a small amount for restructuring, there was a change in overdraft balances and asset finance and there were some other movements as well.

Michael McGrath (Cork South Central, Fianna Fail)
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Is Mr. Trethowan stating that €5.5 billion of the €8 billion sanctioned was not drawn down at all?

Mr. John Trethowan:

That would have been rolled over. It is money that was there for distressed businesses and that is being restructured and pushed forward for another period of time.

Michael McGrath (Cork South Central, Fianna Fail)
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I would class that as being drawn down.

Mr. John Trethowan:

We would not class it as drawn down because it is not what we would term new money.

Michael McGrath (Cork South Central, Fianna Fail)
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So the amount of new money available was €2.5 billion.

Mr. John Trethowan:

Yes.

Michael McGrath (Cork South Central, Fianna Fail)
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The terms "lending targets", "draw-downs" and "sanctions" are used on an interchangeable basis. However, the reality is that the amount of new money from the €7 billion the banks were required to lend into the economy was €2.5 billion.

Mr. John Trethowan:

Yes.

Michael McGrath (Cork South Central, Fianna Fail)
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The SMEs made repayments of approximately €4.5 billion and, as a result, the balance sheets of the banks actually contracted by approximately €2 billion. This means that the amount of money circulating in the economy in 2012 was €2 billion less than expected.

Mr. John Trethowan:

Yes. However, one must see this matter in the context of the bigger picture, namely, that only 39% of SMEs are demanding new lending.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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What was the percentage?

Mr. John Trethowan:

It was 39%.

Michael McGrath (Cork South Central, Fianna Fail)
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I accept that demand is depressed. There is certainly no question about that. Will Mr. Trethowan indicate why so much of the sanctioned lending is not drawn down? Does his office ever assess the reasonableness of the conditions that are attached to loan offers? Businesses have informed me that the security requirements that are attached and the interest rates that form part of the loan offer are often simply prohibitive. Banks are stating that they have approved particular amounts of lending but the reality is that much of this money will never be drawn down. This is because the conditions attaching to the money in question are so onerous that it would not be commercially viable for the borrowers involved to draw it down.

Mr. John Trethowan:

I can only comment on the cases with which we have dealt. We consider a number of behavioural factors as well as the nature of the credit decision.

Elements that we look at include the level of security requested, the interest rate charged and the length of time it takes for the credit decision to be made. We rarely see cases where the cost or security requirement is the barrier to the loan being drawn down by the customer.

Michael McGrath (Cork South Central, Fianna Fail)
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I am trying to get to the reason the numbers are so low. Will Mr. Trethowan give me an indication of the timeframe from when an SME first submits an application for a loan to the bank to when the application eventually ends up on his desk? I know the SME must first get a decision from the bank and then appeal the decision within the bank and that it is only following that decision that it can make an appeal to the Credit Review Office. What is the typical length of time involved?

Mr. John Trethowan:

The Central Bank has issued a code of practice for SME lending. The timescale for each part of the process is typically 15 working days. When an SME applies for a loan, we look for a decision to be made in 15 working days and if it appeals the decision, we ask the bank to return to the customer also within 15 working days. When we receive the appeal from the SME, we will deal with it as quickly as we can.

Michael McGrath (Cork South Central, Fianna Fail)
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Mr. Trethowan is confirming that from the day the SME first applies to the bank for credit the application can end up on his desk within 30 working days.

Mr. John Trethowan:

Yes, within 30 working days.

Michael McGrath (Cork South Central, Fianna Fail)
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That has not been my experience. When SMEs come to me, I point to the option to go to the Credit Review Office, but they are so weary of dealing with banks for weeks and months they do not want to hear about going through another process. They apply to the banks and a few weeks later they comes back to them to look for more information that they did not look for initially - it is like applying for a medical card - and eventually a few months later they receive a decision which they then appeal and takes more time. They then come to us. When we suggest they go to the Credit Review Office, they think it is not worth the hassle.

Mr. John Trethowan:

I appreciate what the Deputy is saying because I have heard it described as the slow "no". The other description is the serial information request. Sometimes borrowers need to step up to the mark and produce the information the bank has asked for, but at other times we find that the bank is asking serial questions.

To return to the lending experience that I mentioned at the start, the inexperience of some front-line staff means they are not asking the correct questions at the time. The application goes to head office and it will come up with questions.

Michael McGrath (Cork South Central, Fianna Fail)
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With the permission of the Chair, I have two other questions. What is the cost of the Credit Review Office? Has it cost approximately €1.5 million to date?

Mr. John Trethowan:

Yes.

Michael McGrath (Cork South Central, Fianna Fail)
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It costs approximately €500,000 a year to run the office. Mr. Trethowan has upheld about 120 appeals so far and the banks have agreed to implement his recommendations in these cases. That works out at a figure of €12,500 for each successful appeal. Does this represent value for money?

Mr. John Trethowan:

I will answer the question in two parts. First, we have helped to protect 1,100 jobs. I think that is good value. Second, a large proportion of the money - I would say it could be up to 50% - is down to publicity. We were criticised at the start because no one had heard of us. We have actively gone on radio and to the newspapers to ensure people know we are there. In the last Red C report I think 78% of SMEs had recognition of the Credit Review Office.

Michael McGrath (Cork South Central, Fianna Fail)
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Mr. Trethowan has said only AIB and Bank of Ireland come under his umbrella and that AIB, Bank of Ireland and Ulster Bank are lending to SMEs in the economy. There is a distinct lack of competition. Does Mr. Trethowan have evidence of this and is it coming through in the way banks are interacting with customers? Has the lack of competition among banks in extending credit to SMEs become a problem?

Mr. John Trethowan:

I am very concerned that having three providers is not enough in any economy. With the best will in the world, three players do not produce good competition. We are seeing a number of entrants into specialist areas, including the debtor finance area. That will be helpful.

Looking at the situation in the United Kingdom, there are some challenger banks appearing which do not have a branch network. They have a credit centre and take deposits. There is a concept - crowd finance - to put savers in touch with borrowers. I think there will be an initiative starting in Ireland in March in this regard. I do not believe we have seen the entrance of any major player, but we see a secondary market developing in the United Kingdom. Having three banks is not enough.

Michael McGrath (Cork South Central, Fianna Fail)
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Thank you, Mr. Trethowan.

Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome Mr. Trethowan. Will he outline what the Credit Review Office does? Many do not know what it does. From my experience of discussing business with SMEs, which is similar to that of Deputy Michael McGrath, people get so weary of the process with the banks that it takes a long time to convince them to lodge an application with the Credit Review Office, of which the State has conducted a review. Will Mr. Trethowan explain the statutory mandate of the Credit Review Office in terms of being able to enforce a settlement on the banks? Also what are the names of the current participant institutions?

Mr. John Trethowan:

The Credit Review Office was set up under section 210 of the National Asset Management Agency Act 2009. That gives us powers to review bank decisions and intervene in pillar bank matters. It covers the NAMA banks, but, in effect, only two of them are active and lending to SMEs. We are restricted to these two banks. Ours powers are to make an adjudication on the lending process and a recommendation to the bank. In effect, the banks are not obliged to follow my recommendation, but in practice they have. There have been a couple of cases in which there have been technical difficulties with security which have emerged after the opinion has been issued. We have sought to use the guarantee scheme to try to overcome these also. The only people who can really put assets on their bank balance sheet are the executives and directors of a bank. We can make recommendations and that is what we do.

Pearse Doherty (Donegal South West, Sinn Fein)
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Is Mr. Trethowan aware of cases in which he has overturned a decision of a bank, a recommendation that has not been implemented because of technical difficulties? Is he satisfied that if he had been aware of the technical difficulties, his decision would not have been made in the way it was?

Mr. John Trethowan:

Yes, a bank has sanctioned the lending, although it may not have liked doing so, but it has abided by the decision made.

We have a very small staff and are going to try to recruit an intern to follow up on cases in which we have made recommendations that lending should take place to ensure the bank involved has followed through and granted the loan. I have dealt with a couple of cases recently in which people came to say the bank had sanctioned the loan, but they were still trying to have the red tape finalised. That is not what the Credit Review Office is about. It is about having an adjudication made and getting the bank to supply the credit. I need to follow up on previous cases also.

Pearse Doherty (Donegal South West, Sinn Fein)
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Is there a timeframe in relation to a bank? Does Mr. Trethowan have an idea of the length of time between the making of his decision and the time credit is granted by the bank? Does it go through another cumbersome process of reviewing the matter internally?

Mr. John Trethowan:

It should be done as soon as possible. In all the opinions we issue we end up with a conclusion showing why we have made the decision, but we also outline all of the recommendations clearly for the bank and the borrower. Sometimes a borrower must also comply with conditions to get the deal over the line. If the borrower drags his or her heels, it will delay the process. I will be following up all cases in the next few months to see that the bank has been prompt in making the credit available and to ensure the SME is still in business because some will have failed.

Pearse Doherty (Donegal South West, Sinn Fein)
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Is that information not available?

Mr. John Trethowan:

No, it is not.

Pearse Doherty (Donegal South West, Sinn Fein)
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In the review of the Credit Review Office one of the recommendations was the number of participating banks should be expanded. What has been the outcome of that recommendation?

Mr. John Trethowan:

We are still working through the recommendations made. We have formally asked Ulster Bank to join the process, but it has declined to do so. We work with it and it works with us on cases referred to us by the Department of Jobs, Enterprise and Innovation. If the Department refers a specific case to us, we can have the office appointed as a mediator.

We are currently working with Ulster Bank on two cases to try to find a solution for specific borrowers. The bank has taken a policy decision not to join the process.

Pearse Doherty (Donegal South West, Sinn Fein)
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Is there a requirement to examine the setting up of the Credit Review Office and to extend the scope of the office by means of legislation so that banks which operate here would be compelled to co-operate with the Credit Review Office?

Mr. John Trethowan:

Given that there are only three active banks it is down to whether we want to include Ulster Bank in the mix. That would be a policy decision for the Government.

Pearse Doherty (Donegal South West, Sinn Fein)
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Would Mr. Trethowan welcome it?

Mr. John Trethowan:

Yes, of course.

Pearse Doherty (Donegal South West, Sinn Fein)
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It is quite startling that only 323 appeals have been made to the Credit Review Office over a three-year period. I can see the value of the Credit Review Office but these types of figures must result in concerns about the operating costs of the office. Mr. Trethowan claims that he has saved a number of jobs and we can deal with that at a later stage. It is not in dispute because there is a value to having the Credit Review Office. However, for a sustainable service, we need to see more traction. Much of the focus has been on the number of people who have gone to the office seeking to make an appeal. However, the statistics about the small and medium business sector and what must be done before that decision to appeal, are just as startling. Of the cases of SMEs refused by both pillar banks, only 784 have decided to appeal within the internal bank system. If only 784 cases have applied for an internal review, the Credit Review Office should be receiving a portion of them. The most number of cases it could have received over the three-year period was 784. That is where the barrier exists. The Credit Review Office can be publicised but if every single case went to appeal to the office, there would only be a doubling of the figures and that is still not acceptable. Can Mr. Trethowan indicate how many SMEs have been refused loans from the banks over the same period which did not seek an appeal at the first stage?

Mr. John Trethowan:

I do not have that information to hand. The banks regularly report that their decline rates are between 10% and 15%. We are constantly trying to improve our service for SMEs. If an SME comes to the Credit Review Office in advance of going to the bank for an internal appeal, we will lodge the appeal on their behalf. We are trying to make it as simple as possible.

Pearse Doherty (Donegal South West, Sinn Fein)
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That was my next point. The State owns AIB and has a large stake in Bank of Ireland. We are paying the staff in AIB to carry out the internal review and then we are paying the Credit Review Office to carry out the other review. A total of 55% of these decisions by the banks have been overturned by the Credit Review Office. Is it time to cut out middle process or at least to give them that option to go directly to the office instead of seeking an internal review? The Credit Review Office is placing advertisements on the radio but I am unsure of the current process. For example, a person applying for a medical card will be given advice on how to appeal the decision. If Bank of Ireland or AIB refuse a loan, should they be required to advise the party of the Credit Review Office and the appeals process?

Mr. John Trethowan:

That is the agreement between the Credit Review Office and both pillar banks. They will routinely offer our leaflet or a reference to our website on the decline letters. Unfortunately, the Red C poll shows that too many people were unaware of either the internal appeal process or the Credit Review Office. There is work to be done by the banks to make those options more visible in the decline letters they send to applicants.

Pearse Doherty (Donegal South West, Sinn Fein)
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Has Mr. Trethowan had sight of the decline letters? I have seen those letters. People do not seem to know about the Credit Review Office.

Mr. John Trethowan:

We have seen the letters and also the reference to the Credit Review Office. I learned very early on in the process. In one appeal we upheld the bank's decision. The appeal ran to about five pages describing how this could be turned into a bankable deal. We rang the person a few weeks later to ask why he had not taken any action. He replied that he had not read the letter past the top line where it stated the appeal had been refused.

Pearse Doherty (Donegal South West, Sinn Fein)
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I understand that. What are Mr. Trethowan's views on cutting out the middle process or at least providing the option to go directly to the Credit Review Office?

Mr. John Trethowan:

We still like the bank to take a second look at the application even if the applicant comes to us directly. It is only fair that the bank would ask a more senior official to consider the application. We typically spend a lot more time examining a case than would a bank for a normal SME application. Those applications are credit-rated and a decision is made. My reviewers roll up their sleeves in an effort to find a solution and that is probably one of the reasons we can get some applications across the line.

Pearse Doherty (Donegal South West, Sinn Fein)
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Deputy McGrath referred to the amount drawn down as new lending. The re-financing has been drawn down but it was drawn down years ago from other institutions. Therefore, it is not new lending. The restructuring would have also been drawn down in the form of an overdraft which has been turned into a long-term or short-term loan. The draw-down is €2.5 billion for applicants who are new lenders applying for the first time for a loan from a bank. What is the total fund which has been approved for such lenders?

Mr. John Trethowan:

I am not sure. In our monitoring we look at the overall sanction target. We then ask how much of that is new money. I am not too sure of the proportion that is drawn, etc.

Pearse Doherty (Donegal South West, Sinn Fein)
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Mr. Trethowan has said the proportion drawn is €2.5 billion, 27%. It is quite interesting that what he has not given us is the proportion that was sanctioned.

Mr. John Trethowan:

I understand the Deputy's question. The overall sanction of €8 billion includes the restructuring and re-financing. I do not have the new money sanctioned separately.

Pearse Doherty (Donegal South West, Sinn Fein)
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We may not agree. The Credit Review Office has produced ten reports on this matter. Would it be fair to say that Mr. Trethowan's reflection on this matter has changed as the reports progressed? The earlier reports were very clear that this was new lending which would fall into the category of the 27%. Later it started to include re-financing and restructuring. Agreements between the State and the banks state that is it new lending rather than restructuring and re-financing. I ask Mr. Trethowan to explain why the definition of those targets has changed in his reports.

Mr. John Trethowan:

To be fair, I have always referred to restructuring as part of the figure. I looked at the reports over the weekend and restructuring was always mentioned in these figures. I know this is of great interest and it is not best understood. If we were not measuring the level of re-financing and restructuring activity, no one else would be looking at this in the round. The Central Bank is only looking at drawn down balances in its official reporting. This is the monitoring of bank activity. If the banks were not being monitored on the level of restructuring and we started to lose a lot of SME businesses because they were being liquidated and were being encouraged to re-finance

then the banks would no longer lend to SMEs. It is important that someone is looking at that issue in the round.

Pearse Doherty (Donegal South West, Sinn Fein)
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May I finish on this point?

Ciarán Lynch (Cork South Central, Labour)
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The Deputy is over time, having had almost 15 minutes. I call Deputy Simon Harris.

Simon Harris (Wicklow, Fine Gael)
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May I share the last two minutes of my time?

Ciarán Lynch (Cork South Central, Labour)
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No, I will allocate time.

Simon Harris (Wicklow, Fine Gael)
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I thank Mr. Trethowan for attending; he is very welcome. It is clear his office is making a positive difference to those who access it, a point on which I imagine all committee members would agree. From the endorsements in his most recent report I note people mentioned the courtesy, help and guidance they received, and how the service far exceeded their expectations. In one endorsement Mr. Trethowan's organisation is described as "a breath of fresh air", in terms of credit lending and review, which is all very positive.

However, as a Deputy representing the Wicklow constituency, I asked a parliamentary question of the Minister for Finance last October who told me in reply that only four applications from my county had reached Mr. Trethowan's office. That leaves me and my colleagues wondering what is the issue. As of last October many counties have sent only one application, including counties Sligo and Roscommon. The northern counties each have one, Leitrim and Kilkenny two, Offaly three, and Wicklow four. The overall figures are disappointing but taking the county by county level and the difference within each local economy the situation is even more disappointing.

I heard some of Mr. Trethowan's comments but wish to get an overall sense of what he believes are the two or three biggest obstacles that prevent more people accessing his office. How effective does he find its advertising campaign? Those of us in politics know that when we engage in certain types of advertising in our constituency we see a spike in the number of queries we receive. Can Mr. Trethowan make a correlation between specific advertising campaigns and consequent uptake?

Mr. John Trethowan:

I will answer that question and also perhaps Deputy Doherty's question about our costs. I would say 50% of total cost has gone on advertising. We use an agency to ensure the advertising is effective and we see a spike every time we launch a campaign. It drives business into the Credit Review Office.

I refer to the coverage of each county. I remind members this is a borrower-driven initiative. I cannot make people come to me.

Simon Harris (Wicklow, Fine Gael)
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I do not believe people in County Wicklow, from where there were four applications, are less likely to come forward than the people in County Tipperary, from where there were 13. There seems to be a definite difference, county by county. I wonder if the Credit Review Office has taken or might take a look at using local advertising, getting right into communities and talking to businesses at a local level. Has it engaged with the likes of chambers of commerce and local business associations?

Mr. John Trethowan:

I have been to a number of chambers, including in County Donegal, and will return to Letterkenny next month. I have been to Cork, New Ross and Dublin and have done a number of presentations along the Border counties. There is always a clinic after the presentation and one is there for an hour afterwards talking to people about their cases and hearing what they say.

Simon Harris (Wicklow, Fine Gael)
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In regard to------

Mr. John Trethowan:

A lot of our activity never reaches the point of a formal appeal. We might get a call to the review office from somebody who is having difficulty with a bank, or something like that. The first thing we do is telephone the bank and ask if we can sort out the matter but we do not record that. I would say at least another 50% of the caseload is solved informally between ourselves and the bank, addressing issues people bring to us.

Simon Harris (Wicklow, Fine Gael)
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It would be interesting if Mr. Trethowan's office could look at that in terms of future reports, if there is more going on than we know about.

Mr. John Trethowan:

We used local radio because one can franchise, buying one sample package and using that. I am to speak on Kildare FM tomorrow morning. Anybody can telephone and ask me for an interview. I have never said "No" to a journalist who comes to me.

Simon Harris (Wicklow, Fine Gael)
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I refer to some other issues. Enterprise Ireland attended the Committee of Public Accounts some weeks ago. A number of years ago it set up a banking relationship unit. The head of that unit told me at the committee that the biggest difficulty it has with banks is the lack of a skill set, to which Mr. Trethowan also referred. Enterprise Ireland specifically referred to this at the committee in regard to banks not having knowledge of new markets or new products. Our banks which were traditionally good at selling bricks and mortar are now finding it difficult to understand the credit possibilities that can arise from supporting a business with a new technological product or emerging markets. Has Mr. Trethowan had any experience of this or has he had any dealings with Enterprise Ireland in regard to that difficulty?

Mr. John Trethowan:

Not as such, but I see instances domiciled in or hosted by Enterprise Ireland. My deputy is an Enterprise Ireland official. We know there are areas in which traditionally banks have not serviced well and Enterprise Ireland is working in partnership with them to try to improve that. In addition, loan guarantee schemes apply not only where there is a security deficit but also where there is an area with which banks are unfamiliar.

Simon Harris (Wicklow, Fine Gael)
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Mr. Trethowan spoke about the fact that although his office's rulings are not binding if a bank does not comply with them it must produce the reason for not doing so. He mentioned this might happen for technical reasons. How many of the rulings granted have not been complied with?

Mr. John Trethowan:

Only a very small handful on the basis of a technical reason. We do not just say "hard luck" but work to try to find a solution to the technical issue and address it.

Simon Harris (Wicklow, Fine Gael)
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Is the small number less than ten?

Mr. John Trethowan:

Less than a handful. The Deputy asked why people do not come to the review office. I believe there are two reasons. The Deputy who raised this point has left but part of the reason is the weariness of the process, whereby people have to engage again and go through the process again. It is worthwhile, however, because as Deputy Harris noted, people who endorsed the service have said they are glad they came. The second reason relates to the fact there are only three banks and people are terrified of not having a bank. Between the decreasing numbers and the contraction of the physical presence of some banks a person could very quickly feel isolated if there was a perception that he or she was going to fall out with the bank.

Ciarán Lynch (Cork South Central, Labour)
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The Deputy will have to share his time.

Simon Harris (Wicklow, Fine Gael)
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My last question-----

Ciarán Lynch (Cork South Central, Labour)
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If the Deputy wants to share time, now is the time.

Mr. John Trethowan:

It is important not to leave a particular question hanging in the air. We have been assured that no bank will victimise any customers who come to us. If anybody does feel he or she has been victimised for that reason we will certainly take steps to ensure-----

Simon Harris (Wicklow, Fine Gael)
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My very last point-----

Ciarán Lynch (Cork South Central, Labour)
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That is fine but if the Deputy runs over time Senator Coghlan will not be included.

Simon Harris (Wicklow, Fine Gael)
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Will the Chairman allow me-----

Ciarán Lynch (Cork South Central, Labour)
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The Deputy can have that argument with Senator Coghlan afterwards.

Simon Harris (Wicklow, Fine Gael)
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Mr. Trethowan need not respond now to my last point. He spoke about banks not asking the right questions in regard to accessing credit; public representatives are also finding this. Is the Credit Review Office producing advice for banks on the kinds of questions they should ask in order to get the right result and in order that people need not go to the office?

Mr. John Trethowan:

That concerns how they do their job.

Simon Harris (Wicklow, Fine Gael)
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Effectively, yes.

Paul Coghlan (Fine Gael)
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I will be brief. I salute the good job done and the beneficial impact Mr. Trethowan and his office are having. I salute his good prudential approach and am aware of his former record as a banker. He has brought about better practice within the banks. Does he accept their practice is improving? We all accept there is lack of demand and competition. Mr. Trethowan mentioned the "wearisome" process which may explain why people do not bother to attend, in some instances. However, concerning the 55% of bank decisions he has overturned what is his trump card? How does he see the mix as between track record, known history, the business plan offered and security?

Mr. John Trethowan:

The essence is cash generation. In all cases, what we are trying to do is to find what is the future cash generation of the business in question. If it is marginal or even insolvent, does it have potential to make it into the future? We would seek to look at what we call earnings before interest - tax, drawings and amortisation - which give a true-cast picture of the business into the future, and see whether that would sustain the required borrowing repayments. That is the key point.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I have a number of questions, both micro and macro-economic. Mr. Trethowan stated some 323 appeals were dealt with by the Credit Review Office; what is the time period involved?

Mr. John Trethowan:

That was over the three-year period.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Credit Review Office deals with approximately 100 appeals per year.

Mr. John Trethowan:

Yes.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is it correct the CRO upheld 250 appeals?

Mr. John Trethowan:

At present, we have dealt with 215 appeals.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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How many of the 215 appeals has the CRO upheld?

Mr. John Trethowan:

We have upheld 120 cases.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Will Mr. Trethowan give me a value for the loan appeals?

Mr. John Trethowan:

It is €13.5 million.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Mr. Trethowan stated this was following 784 internal reviews in the banks prior to the person bringing his or her case to the Credit Review Office. Is that correct?

Mr. John Trethowan:

Yes.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Would Mr. Trethowan have a rough figure for the total value of the 784 loan decisions that were appealed to the bank?

Mr. John Trethowan:

No, Deputy. We do not see the statistics on that at all. We just get information on the number of appeals

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Perhaps I could guess, it would be about four or five times the figure given by Mr. Trethowan.

If the purpose of the Credit Review Office is to try to make a serious impact on the level of credit being provided for small and medium enterprise, which are regularly described by the Government and others as a key engine of economic recovery and the generation of employment, this is just a drop in the ocean. Is it virtually having no impact on the wider economic stage?

Mr. John Trethowan:

If the Deputy considers that between 1,000 and 1,100 people are at work today, who are able to support their families because their business or farm has been granted credit because of the opinion of the CRO, that is not a bad result.

Let me add, there is a parallel appeal system in the United Kingdom that was set up the year after the Credit Review Office was established. They deal with nine banks and in their first report, issued last June, they state they received 40 appeals from Northern Ireland. The tendency to appeal and go further across Ireland appears to be low.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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My remarks are not really a criticism of what the Credit Review Office is doing. Every job that has been saved is well worth protecting. I am sure the people involved are tremendously grateful to the CRO for upholding their appeals. In terms of macro-economics, this is simply not going to have a meaningful impact on the wider economic question of whether we generate large scale employment through the SME sector. Is that not a statement of an obvious fact from looking at the figures?

Mr. John Trethowan:

One must join all the dots to get the picture. The Red C survey and the Mazars survey that preceded it show that less than 40% of Irish businesses demand credit at this point. They have been deleveraging. One will see from the figures that repayments have been almost twice the amount that banks have been willing to lend in the past years. People are paying down debt in the SME sector in a similar way to the personal sector.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Absolutely, in a way that confirms the point of my question. On the macro stage there is actually, notwithstanding the great efforts of CRO, a net reduction in the amount of credit in the system available to small and medium enterprise. This probably corresponds with the general contraction of the SME sector.

Mr. John Trethowan:

To return to my opening statement on the macro-economic side, while we have had a low number of applications and we have helped the businesses that have come before us to the best of our ability, the two pillar banks do not know when they are making a loan to any SME today which of the clients will come to us. They have raised their games from the time I started because we were calling in things to the banks that we felt they should do better. They know we look at various aspects of their behaviour as well as the credit decision. They do not know which of the borrowers to whom they lend will come to us.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I accept that point. My point is that CRO seems marginal in the greater scheme of things. It will not deliver a silver bullet.

Mr. John Trethowan:

If there was a silver bullet to be found, it would have been found before now. I think we will not see the effect of a silver bullet until people starting money in our economy and rising turnover in businesses.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I agree with Mr. Trethowan on that point. Without consumer demand we are going nowhere. The next question is: how does one generate consumer demand?

Mr. John Trethowan:

Confidence.

Peter Mathews (Dublin South, Fine Gael)
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And money, the elimination of legacy debt.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Confidence does not spring out of the sky. From dealing with the cases, would it be fair to say that small businesses are not looking for money because they are not confident about demand? The banks are reluctant to lend money because they are not terribly confident about demand. They both have a point.

Mr. John Trethowan:

I agree with Deputy Boyd Barrett that there must be a starting point in the process of getting the whole thing going. If one is in business and wants to invest, one would want to see a return on the capital. That would come from demand in the marketplace. That will require some confidence in the future. From the soundings I have taken on business and the economy, the emergence of a start on investment is beginning, but it is not at domestic level. It is at corporate level. People are seeing value in Ireland and are starting to invest here. When the consumer starts to spend money and helps the SME in the high street in Tullamore and Donegal, we will see the turnaround.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is Mr. Trethowan saying that the banks do not have a significant role in boosting demand in the economy? If that is the import of what he is saying, I disagree with him.

Mr. John Trethowan:

The key point is that when demand rises, the demand by SMEs to borrow rises and when the SMEs go to the banks, not all of them will be in pristine condition - well capitalised, nice cash flows and good track records for the past three or four years. However some of them will still be viable in an upturn. The key to growth is that banks are not found wanting when they get the challenging applications. That will require some skill and enterprise by the banks.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That is a slightly alarming perspective. I went into AIB with somebody who was negotiating a distressed mortgage. It was clearly unsustainable and what the AIB officer kept repeating was that you might win the lotto. She said that three times. There is an element of that in Mr. Trethowan's last remarks, but it does not sound like a strategy. The reason the Credit Review Office was established was to have an impact on lending that would be substantial for the SME sector and consequently for the dire situation of unemployment in this country. What I am hearing from Mr. Trethowan is that his office will have a marginal effect. He seems to be saying that whatever the banks do will not make much difference either.

Mr. John Trethowan:

I should say to Deputy Boyd Barrett that the lending demand is less than 40%. If lending demand was 66% from SMEs the Credit Review Office would be absolutely needed at that point in time. That is when we will be needed most, not so much as we bumped along the bottom of the economy and tried to keep things moving and businesses sustained. When people seek to increase their working capital for more stock, because things are looking better, and they want to invest in new premises and banks say "no" to them, they can come to the Credit Review Office. That is the way we work as the demand rises.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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What Mr. Trethowan has described is catch-22.

Mr. John Trethowan:

Why?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Because the decisions that are being made by small and medium enterprises not to look for money or on the part of banks not to give it to them if they do, in the few cases that seek it, are rational within their own terms if one is looking at the micro case or a particular business whether it is viable or not. That decision which is rational in the individual case is completely irrational from the point of view of the wider economy.

Mr. John Trethowan:

As I am appointed to look at individual cases that is all I can actually do. We have called in much structural stuff from the empiric evidence we get from the cases. We started with the formal internal appeals process in the banks before we started; that was not in place before we came along. We have had a need for training frontline staff and the banks have invested in that.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I have one very last question as my time has expired. I get that.

Mr. John Trethowan:

There is a range of things we have done structurally to improve the situation. Ireland is the first country to have a generic loan form. There is one application form for all the banks. We have now got the accountants and the banks to agree that there is one standard low business case template and cash template which will be accepted by all the banks. That means that the advisers, accountants, CEBs and the new LEOs should be able to able to mentor and help people to get credit.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That is fair enough and I think the Credit Review Office is playing a valuable role. I am not disputing that, I just wonder how it fits into the bigger picture and I can see the value of what it is doing. Mr. Trethowan appears to be saying that the difference between his attitude towards upholding a loan application and the banks denying it, seems to be the fact that he is taking a slightly longer term view and saying that one's business may not appear viable now but, based on the hoped for resumption of demand, it will be viable. Does that mean that the companies that are getting the loans as a result of Mr. Trethowan's intervention are just about being kept afloat on a very tenuous hope that the position will improve?

Mr. John Trethowan:

We do not look for a lotto win in our opinions. They are based on a rational future view of the business. There are no lotto wins anticipated in the opinions we issue. We would lose all credibility if we were putting opinions to the banks which were clearly unbankable. They must have a logic and a rationale as to why those loans should be made. We are able to do that in most cases.

Ciarán Lynch (Cork South Central, Labour)
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Before I move on to Deputy Peter Mathews, perhaps I can summarise where we are at because there are a couple of actions the committee needs to take. Will Mr. Trethowan provide the committee with copies of those application templates to which he referred?

Mr. John Trethowan:

I would be happy to do that.

Ciarán Lynch (Cork South Central, Labour)
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As we have the banks appearing before us on a regular basis it is good to have that information. The other issue which has become apparent is a situation whereby credit is available but is not being sought to the volume of credit that is out there in terms of the seven.

Mr. John Trethowan:

Certainly credit is available for low and medium SMEs. It is the more challenged cases where we all have a challenge to make sure the banks lend.

Ciarán Lynch (Cork South Central, Labour)
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Is it Mr. Trethowan's observation that AIB is beginning to move decision making on loans down to a more localised level as in the past? Is that assisting SMEs in getting better access to credit or is it creating further difficulties?

Mr. John Trethowan:

The Chairman saw in my report that I was critical of the process and the ability to go in to speak to somebody who can actually take a decision has to be welcomed. It is clear from the SME proprietors and business people to whom I have spoken that they missed the opportunity to speak to somebody who could take a local decision and have a relationship with him.

Ciarán Lynch (Cork South Central, Labour)
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The local bank manger who has a familiarity with the business as to how long it has been trading in the area and probably passes the application but it is up to the bank.

Mr. John Trethowan:

Of course keeping the bank manager long enough until he gets to know the people is the other issue.

Ciarán Lynch (Cork South Central, Labour)
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One thing that struck me about the report is that there is a very significant difference between AIB and Bank of Ireland when it comes to the internal review process. It is leaping off the page when one's looks at it.

Mr. John Trethowan:

I think that would be a question for the two banks.

Ciarán Lynch (Cork South Central, Labour)
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Okay. I think 6% of internal reviews in Bank of Ireland are changed and 36% in AIB are changed.

Mr. John Trethowan:

Yes.

Ciarán Lynch (Cork South Central, Labour)
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That is huge in percentage terms. As the committee needs to make a recommendation on foot of Mr. Trethowan's next reply, are the cases that come to the Credit Review Office-----

Peter Mathews (Dublin South, Fine Gael)
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That is over three years. Some might find since Mr. Duffy took over that AIB has less of-----

Ciarán Lynch (Cork South Central, Labour)
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AIB seem to have an internal mechanism that appears to work. The observation is that the Bank of Ireland's internal mechanism is either brilliant the first time out or else it is very bad the second time internally. What is Mr. Trethowan's observation of that in terms of the cases he receives? Is it predominantly Bank of Ireland cases that are seeking attention in his office?

Mr. John Trethowan:

There are 120 cases where we recommend that the banks lend the money - 64 have been AIB and 56 have been Bank of Ireland. Therefore, we are not seeing a huge difference between the two banks.

Ciarán Lynch (Cork South Central, Labour)
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There is something that has arisen. Can we put a formal proposal? An issue that struck me when Mr. Trethowan was speaking was that when the banks completely turn a review process, there is not a direction that the Credit Review Office is available to them as a statutory mandatory practice. I propose that the committee write to the Minister for Finance, the Secretary General of the Department of Finance and the CEOs and chairpersons of Bank of Ireland and AIB stating that we will be requesting them to give the details of the Credit Review Office in terms of appealing any decision of an internal appeals process that they made themselves that has been found to be unsuccessful and that they would do that from hereon as standard practice. We will notify the Central Bank of same. Is that agreed? Agreed.

Peter Mathews (Dublin South, Fine Gael)
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I was going to propose in my contribution that given the effectiveness, at a microcosm level, of what has been done to date with a very limited mandate, and really one of listening, that what Mr. Trethowan is doing be brought to the attention of SMEs that have not had a happy credit application experience and want to take it further. The work he has done and the overturn rate suggests that at a 50% level of overturn, the banks in these cases are only 50% competent in the first instance. One could take that understanding. I would go a little further than the Chairman's suggestion and say that the Credit Review Office could be retitled a bank credit operations review and audit committee and that Mr. Trethowan would have unilateral authority to go in and examine new lending, restructuring and re-financing of the SME portfolios in the banks. The reason that is justified is that we own AIB and we and the Eurosystem fund Bank of Ireland. Together we guarantee their deposits. Effectively, we should own more than 50% but by a dint of an unhappy 31 July 2011 experience, we raided the pension reserve fund to prop it up at a ridiculous price. There we are but we still have a leverage over them. I suggest that the banks show a 50% competence in dealing with the SME sector. We know they are under a tsunami of distressed mortgages which indicates they need for more capital than the last PCAR indicated - I know that from recent discussions with CEOs of the banks. In that case Mr. Trethowan's commando small team could be expanded to give value for money by looking at the wheels and cogs within the bank in their operations for approving new lending, restructuring existing legacy loan portfolios and refinancing the customers who cannot continue with their credit arrangements with banks outside the system.

I am thinking out loud when I suggest the reason there is not much competition and the landscape here is a burned-out, gunged up, swampy financial battlefield that needs to be cleared by bulldozer.

Mr. John Trethowan:

I am not sure how to answer that.

Ciarán Lynch (Cork South Central, Labour)
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Mr. Trethowan is not the first witness to struggle with Deputy Mathews.

Peter Mathews (Dublin South, Fine Gael)
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It is a précis of the overview of where we are at. It comes back to what Deputy Boyd Barrett was saying about whether the banks need more capital and better capabilities in their teams assessing various portfolios to be more responsive and brutally truthful about their requirements.

Mr. John Trethowan:

The banks are working hard to upskill the younger staff. Over the past four months, they have introduced a lecture on SME lending in a course at the Institute of Bankers in Ireland. It is a four-day course, which is long, and deals with the hotels, hospitality and property sectors in depth. The institute is doing good things on education, from SME lenders to bank directors. The closest we get to going further and intervening, as Deputy Mathews suggests, is in the Grant Thornton report, which suggests we could audit the internal bank appeals. There could be legislative issues because of customer confidentiality. If people have not requested us to intervene on their behalf and review the lending file or application, the bank could say that we should not do so. We may need an order.

Peter Mathews (Dublin South, Fine Gael)
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With respect, auditors are legislatively protected from any threat of breaking of confidentiality when they review the books and report to the members. The State is the member of AIB and is a significant member, with public interest directors, of Bank of Ireland. This could be an adjunct to the normal audit function, which failed so miserably in the past. Every bank broke all the rules of prudential banking by having loan to deposit ratios of over 150%. That is like insurance companies having no reserves to meet claims. It is shocking and people did not pause to think about this because of the fright of the deficit on public expenditure. They did not see the whole financial system was totally clapped out.

Mr. John Trethowan:

The first thing we need to do is increase our numbers because we are a very small team. We cannot go out and ask for people because we are a public affiliated body. We are in the procurement process at the moment.

Peter Mathews (Dublin South, Fine Gael)
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I would like to propose that to help Mr. Trethowan. What the Credit Review Office has done on a microcosmic level is very instructive, illustrative and revealing. If we expand it, we will get a very effective team of visitation and penetration into the banks. The Central Bank only deals with aggregates and does not have a clue what is going on.

Mr. John Trethowan:

The Central Bank has prudential divisions that go into banks but perhaps it has a different objective to us, which is looking for the customer's perspective.

Peter Mathews (Dublin South, Fine Gael)
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The Credit Review Office is getting into the nitty-gritty, the inside leg measurement stuff.

Kieran O'Donnell (Limerick City, Fine Gael)
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Much of the areas of interest to me have been covered. How many appeals were made from inception last year?

Mr. John Trethowan:

In all, we had 331 people approach the office and we have issued opinions in respect of 215 at the last count. There are 22 complaints pending and in the works and 24 complaints where the customer must complete more work. Some 23 complaints were withdrawn by the customer and the banks overturned 22 decisions, outside the appeal process, after the appeal had started. That means the bank has lent the money. We also have 25 applications waiting in the slipstream.

Kieran O'Donnell (Limerick City, Fine Gael)
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Some 42% of the internal reviews ended up going to the Credit Review Office, with 331 cases out of 784 internal reviews. That is well below 50% of the banks' internal reviews going to the Credit Review Office. The 55% of appeals upheld gave rise to additional lending of €13 million. Does that amount to 250 incidents?

Mr. John Trethowan:

The incidents where we upheld the banks' credit decisions amount to €7.7 million.

Kieran O'Donnell (Limerick City, Fine Gael)
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Where does the figure of €13 million come from?

Mr. John Trethowan:

That figure refers to the amount of credit where we have overturned the bank's decision.

Kieran O'Donnell (Limerick City, Fine Gael)
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The cases where the banks' decisions were overturned amount to €13 million and cases where they were not overturned amount to €7.7 million. The role of the Credit Review Office is within the SME sector. Is Mr. Trethowan's happy that the limit of €500,000 is high enough?

Mr. John Trethowan:

I feel it is at the moment. If the economy picks up and demand picks up and if we get noise about an issue with sums between €500,000 and €1 million, we can go back to the Department of Finance. The Minister will listen if we say there is a demand we cannot meet. The other thing we do in the Credit Review Office, with two senior reviewers, is to take calls from the Department of Jobs, Enterprise and Innovation on a specific case. We worked on cases up to €55 million where receivers were being appointed and they wanted a second opinion on whether the banks were doing all they could.

Kieran O'Donnell (Limerick City, Fine Gael)
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Does the office charge for that opinion?

Mr. John Trethowan:

No. This is a case where the receiver is going in but we have been asked, before the receiver goes in, to examine whether the bank has done everything it can. In other cases, large individual businesses are having credit issues and one of my reviewers may mediate.

Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Trethowan's office has the flexibility to deal with specific cases.

Mr. John Trethowan:

We can be appointed as a mediator by the borrower.

Kieran O'Donnell (Limerick City, Fine Gael)
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How many people are in Mr. Trethowan's organisation?

Mr. John Trethowan:

The core team is myself and my deputy and the person who takes the helpline calls, which solves many problems.

Kieran O'Donnell (Limerick City, Fine Gael)
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Are there three employees?

Mr. John Trethowan:

There are three permanent employees and my review team includes three senior reviewers, two agri-reviewers and two reviewers. We also used two chartered accountants and an ex-CEB chief executive officer. We were once accused of being bankers looking after bankers. If we uphold a bank's decision, we send our opinion to these third parties.

Kieran O'Donnell (Limerick City, Fine Gael)
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Are they employed full-time?

Mr. John Trethowan:

No, none of them are employed full-time. They are only paid by the hour on the cases they work on. If we have no business, they are not paid.

Kieran O'Donnell (Limerick City, Fine Gael)
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So there are three full-time staff members and approximately seven reviewers.

Mr. John Trethowan:

We will increase the review panel by about ten because of the anticipated work.

Kieran O'Donnell (Limerick City, Fine Gael)
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What is the total number of staff at the moment? Can I have a number?

Mr. John Trethowan:

It is ten or seven.

Kieran O'Donnell (Limerick City, Fine Gael)
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Is it ten including the full-time staff members?

Mr. John Trethowan:

Yes.

Kieran O'Donnell (Limerick City, Fine Gael)
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What is the annual budget?

Mr. John Trethowan:

The annual budget is approximately €500,000 per year but at least 50% of that is spent on publicity and advertising to get the brand out there.

Kieran O'Donnell (Limerick City, Fine Gael)
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As far as Mr. Trethowan is aware, are banks advising clients that they have an option to go to the Credit Review Office?

Mr. John Trethowan:

They are obliged to do so. I refer to the Red C poll.

Kieran O'Donnell (Limerick City, Fine Gael)
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Is it a statutory obligation?

Mr. John Trethowan:

We asked them to do that at the beginning of the process and they agreed to do it.

Kieran O'Donnell (Limerick City, Fine Gael)
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But it is not statutory.

Mr. John Trethowan:

No, but we routinely check that leaflets are in the branches and things like that.

Kieran O'Donnell (Limerick City, Fine Gael)
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I will leave it at that.

Mr. John Trethowan:

I was a bit disappointed with the last Red C poll because there was a high percentage of people who said they had not been made aware of the appeals process.

Kieran O'Donnell (Limerick City, Fine Gael)
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That is something to change.

I shall return to the figures quoted by Mr. Trethowan regarding lending. The banks were required to provide €8 billion for lending in 2012.

Mr. John Trethowan:

It was €7 billion.

Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Trethowan told me that out of that sum, €2.5 billion was new lending and, effectively, €4.5 billion was for restructuring. Does that €2.5 billion represent approved or drawn-down lending?

Mr. John Trethowan:

That was sanctioned new money.

Kieran O'Donnell (Limerick City, Fine Gael)
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Was it drawn down?

Mr. John Trethowan:

Some of it may have been sanctioned but not drawn down.

Kieran O'Donnell (Limerick City, Fine Gael)
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Does Mr. Trethowan know the figure that was drawn down?

Mr. John Trethowan:

No; I have not got it with me.

Ciarán Lynch (Cork South Central, Labour)
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I ask the Deputy to get to the point or he will run out of time.

Kieran O'Donnell (Limerick City, Fine Gael)
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The banks have contracted SME lending, from what we can see here, by €2 billion. They may even have contracted it by more because it may be sanctioned lending rather than drawn-down lending. Does the Credit Review Office analyse the figures in depth with the banks? I ask that it do so. The banks have been before the committee and the representative of Bank of Ireland told us that the €3.5 billion was all new lending, while AIB said that of the €3.5 billion, only €600 million was new lending. Mr. Trethowan has told us the figure for new lending is €2.5 billion. The figures do not add up. If we add €3.5 billion to €600 million, that gives €4.1 billion.

Mr. John Trethowan:

Yes.

Kieran O'Donnell (Limerick City, Fine Gael)
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That is €4.1 billion versus €2.5 billion. Someone here is not telling us the facts and I ask the Credit Review Office to go to the banks.

Mr. John Trethowan:

I agree that the calculation is confusing. Let me clarify it using my notes. Each quarter we receive a funds flow statement from the banks. I have noted €2.5 billion as new lending and I can split it between new lending, changes in overdraft balances, changes in asset finance, changes in-----

Kieran O'Donnell (Limerick City, Fine Gael)
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Is that within the €2.5 billion?

Mr. John Trethowan:

Yes.

Kieran O'Donnell (Limerick City, Fine Gael)
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That is not new lending.

Ciarán Lynch (Cork South Central, Labour)
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The Deputy has made his point and he is out of time. I call Deputy Mary Lou McDonald.

Kieran O'Donnell (Limerick City, Fine Gael)
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May I ask a final question? I ask Mr. Trethowan to examine those figures in depth. Obviously that has not happened. Restructuring an overdraft into a term loan is not new lending.

Mr. John Trethowan:

We do not class it as new lending. We are in constant dialogue with the two banks about the figures they report to us.

Kieran O'Donnell (Limerick City, Fine Gael)
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How much of the €2.5 billion is new lending that was drawn down?

Mr. John Trethowan:

That is classed as new lending.

Kieran O'Donnell (Limerick City, Fine Gael)
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Mr. Trethowan said that some of it was overdraft restructuring.

Mr. John Trethowan:

That can refer to new overdrafts.

Kieran O'Donnell (Limerick City, Fine Gael)
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That is not new lending but new overdrafts.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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The consensus is that Mr. Trethowan's small group of staff provide a useful service that is perhaps inadequate for the global task. I want to explore two matters with him.

Peter Mathews (Dublin South, Fine Gael)
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The Credit Review Office has revealed the size of the task by the work it has done.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Yes. I am not being critical. I am trying to give an overview. Does Mr. Trethowan have a view about extending the office's powers? Should its regulatory function be strengthened and given mandatory powers? Obviously the committee seems to agree that the powers of the office could be improved, that it should have more discretion and that its hand should be strengthened. Can he briefly tell us his views on that?

Mr. John Trethowan:

When my office was established by the late Minister for Finance, Deputy Brian Lenihan, I was instructed not to create an industry. The whole office was designed to be an answer to a crisis rather than an institution. I was told in no uncertain terms that the office was a temporary measure. As soon as we are not needed we will go away.

With regard to improved powers, some of them might be better granted to either the consumer affairs division or the prudential side of the Central Bank. I would be cautious about taking on too much power. I would prefer to keep my focus on SMEs that require credit but are potentially viable, so we can help them get through this crisis. That is what we were set up to do. It would be detrimental if we lost focus and expanded in too many areas.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I shall make a counter-argument. If anybody imagined that the recession, the crisis, the slump - call it what one will - would be short term, we have all been enlightened in that regard. For any borrower, particularly in the SME sector, the review mechanism is a valuable permanent arrangement. As Deputy Mathews has said, the State is bound up with the banking sector in a way that was not the case a decade ago. One imagines that at some stage the majority of banks at least will return to their private commercial status. Let us hope that is the case. To some extent, borrowers will view banks as being impenetrable when it comes to decisions. The review mechanism redresses the balance and gives a level of transparency to borrowers.

Mr. John Trethowan:

Before the Deputy arrived I made the point that there was a 41% demand for credit by SMEs. We have received a reasonable, small but steady stream of appeals and we are dealing with them. If demand increased to 66% from the SMEs then a lot of appeals would come from what I would call challenged businesses and we would be at capacity level working to make sure those businesses were properly serviced and that the banks stepped up to the mark. I hope there will be increased demand before too long. An upturn in the economy would lead to an increased demand for credit by SMEs. We would be in the right position for that.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I was present when Mr. Trethowan said that.

Mr. John Trethowan:

Sorry.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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I heard him say it. With all due respect, his comment reinforces my point rather than his.

My second question comes from a slightly different angle. Other Credit Review Office activities during the quarter have been itemised. Mr. Trethowan has also met the troika. Can he tell us about the meeting? What was the agenda? What was the purpose of the meeting with the troika?

Mr. John Trethowan:

I have met the troika four times. They are interested in hearing our view on lending conditions in the SME sector, both on the banks' performance and on the condition of SMEs. That is the nature of the briefing that we undertake.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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What did Mr. Trethowan tell them?

Mr. John Trethowan:

Obviously they have a fair view of the banking system and the state of the banks. We were able to outline some of the challenges that face SMEs at present, both established SMEs that have been through a period of low growth and those whose reserves have been invested in depreciated fixed assets such as buy-to-let properties and are thus not available for the businesses. We have also seen some businesses that did not go to banks but invested in capital projects with their working capital. That is a very dangerous thing to do, because at some point one will run out of cash but the project will not be finished and cheques or payments will start to bounce. We have had to intervene on behalf of such businesses. There is also the question of start-ups and the possibility of getting them capitalised and mentored.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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We have also met the troika on a number of occasions. I shall give my take on them.

While they listened politely to concerns about demand in the economy and the fact that the domestic economy is flat as a pancake, I walked away with the view that either they did not really understand the significance of that or they were not terribly bothered by it. It certainly was not on their list of priorities. What was Mr. Trethowan's impression? Did they understand that part of the equation? Do they care?

Mr. John Trethowan:

In the July briefing they started by giving us their view of the Irish SME sector and the banking sector. I think the man was Dutch and he was bang on the mark in his presentation. Their research was good. I could not have questioned anything they had found.

Mary Lou McDonald (Dublin Central, Sinn Fein)
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Are they well aware of the demand dilemma and the lack of demand in the economy?

Mr. John Trethowan:

I believe that lack of demand is coming through across Europe in requests for borrowing. The UK experience is the same. My counterpart there is talking to the Department of Trade and to the Scottish Parliament in Holyrood and has outlined to them that the problem is not just on the supply side but that the demand side is weak as well and that there are also capability and structural problems in the SME sectors that need to be repaired. The SMEs coming forward for loans are not all pristine and shiny.

Fidelma Healy Eames (Fine Gael)
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This is my first time attending this committee and I deliberately came because of Mr. Trethowan's presence. I had an experience last year with a company that exhausted itself trying to get a loan from the bank. I strongly recommended that it go to the Credit Review Office but it would not because it was so exhausted. This company had an offer of orders worth €7 million. It needed to borrow €500,000 to buy equipment to service those orders and to hire seven people. AIB was the bank involved, one of the pillar banks. I have put this on the record already. The bank refused once and when the company applied for a review the bank refused again. It then waived the authority so that I could intervene. After three or four months I got €350,000. This was despite my recommending that the company go to the Credit Review Office. It did not want to start the process again because it was so exhausted and time was of the essence. It is ridiculous that it should have taken that long but it was worth it for what we saved.

Mr. Trethowan is aware of the pressure on businesses which are refused funding and that they get exhausted. If he is able to overturn 55% of the decisions - I do not care if that amount is low - he has credibility and the banks are taking on his suggestions without his having a statutory remit in the area. Is he doing any work with the banks at the moment to make the experience easier in the first instance for the SME borrower? If not, would he see merit in doing this? Are the decisions that he upholds always for the original amount of the loan or sometimes for less? Does he deal with Ulster Bank?

Mr. John Trethowan:

In answer to the first question, at our request we got the common application form and the templates for the business case and the cash flow. That is early days. For an individual business one would wonder what difference that makes.

Fidelma Healy Eames (Fine Gael)
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Are banks using those templates now?

Mr. John Trethowan:

The three banks are using them. I spoke to the chartered accountants in November. When local accountants are au fait with these forms they will know this is how to apply for bank credit. We will also want to work with the local enterprise offices, LEOs, that will replace the county enterprise boards, to train them in how to use these forms because we will be asking people to go there for help and mentoring.

Fidelma Healy Eames (Fine Gael)
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Is that allowed within the Credit Review Office's current remit?

Mr. John Trethowan:

Yes. As well as the opinions we are drawing on anything structural that we think might help the situation. That is a good initiative and will work well not for individual businesses but for advisers who can help businesses access credit from the banks. It might also help the banks to train their staff.

Fidelma Healy Eames (Fine Gael)
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Absolutely.

Mr. John Trethowan:

In response to the question about the amount we get for people, there are times when we will take a loan application and we might improve the application by reducing it slightly but there is no point in getting too little money to survive. That will only lose money for the company but sometimes we have used First Steps which is the micro-enterprise loan fund to help reduce the load on the bank which makes it more bankable. We use Leader grants as part of the mix. We are always trying to find a deal that we can get across the line for the borrower. It does not have to be a bank loan.

Fidelma Healy Eames (Fine Gael)
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Is the Credit Review Office pursuing different lending, not just from a bank?

Mr. John Trethowan:

We use whatever tools we can find because when an SME comes to us it is not a question of making an adjudication on the bank decision, it is a question of trying to help the SME.

Fidelma Healy Eames (Fine Gael)
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That is a key point. That means that the Credit Review Office is exactly what SMEs need because all they want is access to the credit, the money. If the Credit Review Office is accessing all potential lenders not just the bank that refused them in the first instance, it is a total asset to the business.

Mr. John Trethowan:

The first thing we do is to see if the application is viable - can the company service the loan because there is no point going forward and getting people into a debt that they cannot serve. We will do that but then we try to find every mechanism we can to help them get the credit.

Peter Mathews (Dublin South, Fine Gael)
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The tragedy is that the banks did not do this. This is what they should have been doing for the past 15 years.

Fidelma Healy Eames (Fine Gael)
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I agree. Does the Credit Review Office work with Ulster Bank as well and what figures does it have for overturning its original decisions?

Mr. John Trethowan:

We have no mandate for Ulster Bank because it is not in NAMA but we do meet it and, for instance, it introduced its own internal appeals process as good practice. We did ask it if it would join us but it declined. I think the word came from Edinburgh. If we are appointed to mediate it works with us.

Fidelma Healy Eames (Fine Gael)
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I wish Mr. Trethowan the best of luck and continued success. Thank you, Chairman.

Aideen Hayden (Labour)
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I apologise for not being here for Mr. Trethowan's presentation. Unfortunately I had to attend another meeting.

I am far from convinced that the two pillar banks are engaging more with customers. I think they are doing the exact opposite. They are withdrawing from front-line services, possibly to protect their bottom line. I am aware that in the UK there have been greater moves from German Landesbanks to come into the commercial lending sector. Has there been any genuine progress in the Irish banking sector's constructive engagement with the SME sector? I remain to be convinced that there has. The level of appeals is low. We all know from personal experience the anger people feel towards the banks with regard to lending. Can Mr. Trethowan put his finger on exactly why there is not more of an outcry and more people going to the Credit Review Office? It strikes me that we have a very loyal attitude towards our banking sector. We are incredibly loyal and do not tend to change bank or shop around for a bank. Is there not perhaps a fear of complaining in the SME sector, particularly the smaller SMEs? The owner-directors of some small SMEs take out their personal loans from the bank where they borrow for their business. That is quite common.

There is a fear within the sector of putting one's head above the parapet and bringing a bank to book if a person believes he or she has been treated unfairly. It seems that the level of engagement with the Credit Review Office is far lower than the level of anger on the street would seem to indicate.

Mr. John Trethowan:

The Senator has put a finger on the reasons application numbers are low. Shopping around is fine, but for a small or medium enterprise, there are only three banks in town. As some of the banks are contracting physically by closing branches, etc., there is a feeling of remoteness and isolation that does not help one to have courage in a complaints process. The record of people in Ireland complaining is well known, but the act of lodging a complaint is another aspect. In the UK counterpart of the Credit Review Office the first year report indicated that it dealt with approximately 60 million people and received 2,177 applications from nine banks. It received 40 from Northern Ireland. People do not seem to go the whole way in complaining. When the Credit Review Office was set up, we tried to ensure customers and bank staff understood there would be no penalty for going to it. To date, I have heard nobody indicate he or she had been victimised because of lodging an appeal. People may be wary of the process or falling out with their bank because there is no alternative within 20 miles if they do fall out with staff in the local branch. They may be afraid of what might happen if they were to go to the Credit Review Office. The proprietor of a small or medium enterprise with ten or 15 people working in it would do anything to ensure they stay in work, including making an appeal to the office.

Aideen Hayden (Labour)
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Its advertising campaign is very good, but it could be grittier.

Ciarán Lynch (Cork South Central, Labour)
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Deputy Peter Mathews has a supplementary question to ask.

Peter Mathews (Dublin South, Fine Gael)
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It has been a pleasure to hear Mr. Trethowan's contribution and answers to our questions and observations. Deputy Richard Boyd Barrett mentioned the big picture - the recovery of demand and the economy. The banking system is like the plumbing system that makes a house - the economy - warm or go cold. How can we support demand instead of it going flat, as Deputy Mary Lou McDonald mentioned?

It has been mentioned that exports have survived, with the sector managing to reduce costs and expand revenues. By definition, it has boosted profits. It seems that they are mostly from companies which are supported by foreign direct investment. The legacy debts on bank balance sheets have suffocated households and small and medium enterprises, which is why there has been a net contraction of €2 billion in the economy. We must pay attention to what some people outside are saying, that a debt write-down is a must. The indebtedness of the banks to outside creditors needs to be dealt with as an imperative. This is called creditor contraction by the likes of Professor Carmen Reinhart, Mr. Martin Wolf and Professor Stiglitz. It would provide the creditor capital cushion needed to allow the banks to spring clean their balance sheets and get rid of the legacy debts which are weighing down on businesses that deal with the Credit Review Office and that have profitable projects that could be financed with credit. The old stuff is like a gangrenous limb that is killing the banks; the same applies to households and the problem has not been faced. Households cannot adjust to a sustainable expenditure pattern which would allow an opinion that it makes sense to invest in the economy, employ, produce and distribute goods and services. People do not get it. I can see that Mr. Trethowan is a kindred soul and could add his persuasiveness and authority to get the message across to Departments, Ministers and advisers. He is at the coalface or in a theatre like a surgeon. He has seen the bodies and knows what are the vital statistics. He has described the position in microcosm.

Mr. John Trethowan:

I have described the Credit Review Office as the accident and emergency department.

Peter Mathews (Dublin South, Fine Gael)
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Mr. Trethowan should keep up the good work. We need his persuasiveness.

Mr. John Trethowan:

When we see a case, we would look at the profit and loss accounts for three or four years. The businesses which will make it have increased their efficiency. The people involved have not wrung their hands but worked hard to be leaner and fitter. That is why they deserve support rather than having to hope for a lotto win.

Peter Mathews (Dublin South, Fine Gael)
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Senator Aideen Hayden made a correct point. There is a fear in the banks and their customers. We must eliminate this fear through correct management and the provision of facts. We must have a write-down.

Mr. John Trethowan:

We cannot suggest a write-down as part of our solutions, but if there is a bad investment decision involving three or four buy-to-let properties, we can try to ring-fence the problem to help the core business. We suggest the other issue be dealt with at a later stage.

Peter Mathews (Dublin South, Fine Gael)
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By inference, the bad piece must be written down.

Ciarán Lynch (Cork South Central, Labour)
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I brought in the Deputy to ask a brief supplementary question.

Peter Mathews (Dublin South, Fine Gael)
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I thank the Chairman who has been very kind to me today.

Ciarán Lynch (Cork South Central, Labour)
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Yes, as always. I thank Mr. Trethowan for coming before the committee. There is broad respect and an appreciation of the work being done, among Members of the Houses and, more importantly, in the business sector. While Mr. Trethowan has brought a watchdog to the credit sector, we understand the office has responsibilities and obligations. It is not about getting credit for companies that are almost facing bankruptcy, with further debt being added. As a recommendation was made, we will write to various parties to request that the office be part of the notification procedure in terms of internal reviews. The office might follow up on our request that statements and templates be provided. I thank our guests for their time and we will probably see them again. The reports of the office are of interest to the committee and we wish it continued success.