Mr. John Moran:

As I mentioned earlier, in the case of the banks we are now meeting with as many of the board members as are available on a regular basis, most typically myself and the Minister. We have an agenda that includes not just mortgage arrears but also lending and SMEs. We raise it at the level of the boards to ensure that they are putting as much pressure as they can on the banks. We also do that indirectly by virtue of the fact that we want and insist that the banks should move towards profitability. The banks understand that the only way they can become profitable is by lending money. There is no point in not doing any sales, in terms of loans, as they will not be able to generate any profits. I mentioned earlier the shared frustration on the mortgage arrears. Equally, in this area we continue to try and figure out what we can do with this. We are not the only treasury struggling with this. We have hosted conferences with people across Europe to try and understand if they have any tricks or techniques that we are not using here.

We have an SME funding group which involves people from across the system to ensure there is a whole-of-government approach to this. It meets every two weeks in my Department. We have a stakeholders group where we bring in the banks, all of the participants and the representative bodies for these various companies in the tourism sector, SME sector and everything else. I have almost threatened to start publishing the minutes of that meeting so people can understand where we are going. We send out consultation papers to see if there is anything else we could do, and we do not necessarily hear all the solutions, even from the industry bodies, as to what more we could be doing in this sector.

The banks have come from a position where they have not been well positioned to do this lending. Certainly, two years ago the banks were in much worse shape than they are today. The difficulty we still face in respect of a lot of companies we talk about is a more complex issue about high rents, overhang of debt and balance sheets that in many respects are also lacking enough equity for banks to be able to make loans. That is not to say there are not still issues in the banks. The fact that we engage with the Credit Review Office as much we do on situations shows that. When we get a customer who has had a problem with a bank where it is not appropriate for us to intervene in respect of that customer, we can pass it on to the Credit Review Office. Even in scenarios where it is not statutorily entitled to engage, because, for example, the loan is above its limit, it has assisted us by then engaging with the banks to try to understand the situation. In some cases that has also resulted in solutions. In other cases it has resulted in an analysis which says the bank's decision was right.

I believe there is a complexity to this discussion. The funds we have introduced with the NPRF should add very welcome and necessary equity type funding into the balance sheets, so we can try and work out the more important employers. We still have the scenario I mentioned earlier of smaller companies not necessarily running themselves as well as they should to get loans, and their situations are tougher. However, we have scenarios that we cannot understand. We have a micro-finance fund with almost no applications. That is very strange in the context of what we are hearing about small companies not being able to access funding. There are perhaps 100 or 200 applications to the micro-finance fund. We were initially worried that we would be inundated with applications but we are not getting any. AIB issued a new product at the end of last year where up to €25,000 of lending is available to existing customers with a 24 hour time approval. Again, there is just a handful of applications. Therefore, there is also a serious issue with demand. It could be that the demand has been weakened by people's belief that banks are not lending. Banks want to lend. Whether they are well equipped to do it or not, I do not know, but it is important that this message is conveyed.