Mr. John Trethowan:

The stronger we can make the SME sector in Ireland, then the stronger the economy will be. There is much work to be done on raising capability, especially for smaller businesses, and much hard work has been done by the three main small business trade bodies already and that will continue. As I said in my presentation, the banks do a lot of mentoring and provide a lot of self-help advice on their web pages. I know from experience that those who seek that help are probably not the people who need it the most. It is the people who do not go to trade shows or read the advice available on the websites of banks that need the most help. Many farmers who have come to us have not used the Teagasc advisory service but if they had done so, they probably would not have had to come to us in the first place. The issue is trying to reach the people who do not engage because they are probably the ones who need the most help.

The SBCI offerings were mentioned. That is a question for the SBCI because it is a different organisation which works in this area. We work closely with it but it will decide what it is going to do next on the offering side. There will be more offerings. One must start somewhere and the funding line was the first product that it issued. It will develop other offerings as time goes on.

The Senator asked about policy. If there are policy gaps, perhaps that is where the SBCI can start to think about funding lines.

I will return to my old hobby horse. The main challenge for many small businesses and farms is a lack of capital. However, capital of more than €3 million is available for larger businesses but most of the businesses that we see - this applies to the vast majority of SMEs in Ireland - need capital of between €50,000 and €1 million. It becomes very difficult to assess a business for venture capital when there are not big numbers behind it. We need a product to try to help bridge the capital deficit and at the moment, the loan guarantee scheme is a sort of pseudo instrument to do so. Perhaps the SBCI can provide such a product somewhere down the line.

The Senator is right that we meet the banks every quarter. I will meet the Bank of Ireland tomorrow and AIB next week, along with the Department of Finance. We will go through their figures for the quarter. We will also discuss how the banks see the market and what challenges they see because they are on the front line. That will provide us with interesting information which will be reflected in the reports the committees will see.

I do not think we will have a boom to bust landing because lessons have been learned. Bankers are contrite at this point in time and until such time as someone encourages them to increase their return on equity, increase their dividends or whatever, then I cannot see things moving forward. Certainly, the Central Bank now has hawk eyes on the lending quality as well. In fact, some of the things we do and suggest to the banks would probably lean against the far edge of what their risk tolerance would be for lending but we still think the deals are doable.

The last time I was here there had been a bit of a spat on the loan defaults and appeals of the Credit Review Office but we pushed back a bit. We have worked with the banks in a more mature fashion since then. In terms of the deals we suggest and which the banks do, some of them will be stressed from time to time. All of the cases that come to us are challenged before we get them. In most parts, the lending is still there and the banks are not taking huge losses on what we suggest that they do and it is reasonably safe. I think I have answered all of the Senator's questions.