Brian Lenihan Jnr (Dublin West, Fianna Fail)

The objective of the Credit Institutions (Financial Support) Scheme is to maintain financial stability in the best interests of the public and the economy of the State. To that end, the scheme provides for the regulation of the commercial conduct of covered institutions and, in particular, requires each covered institution to appropriately manage its balance sheet in a manner consistent with the overall purposes of the Credit Institutions (Financial Support) Act.

As regards lending, none of us wants to see a situation where viable businesses fail because banks will not lend them money. At my meetings with certain financial institutions over the last two weeks, I asked those institutions covered by the guarantee scheme to consider the contribution that they can make to the economy through appropriate credit initiatives for small and medium-sized businesses and otherwise. I welcome the fact that certain institutions have announced initiatives in this regard.

As I indicated earlier, I have been in regular contact with my colleague, the Tánaiste, at the Department of Enterprise Trade and Employment regarding the flow of lending to small business. I recently met Mr. Plutarchos Sakellaris, Vice President of the European Investment Bank, which recently announced that it was providing additional funding through its lending facility for SMEs in the European Union. Mr. Sakellaris confirmed that the bank has been in discussion with a number of Irish financial institutions about participating in this facility for SMEs and that the EIB hopes that agreements to provide such loan facilities can be finalised as soon as possible. I have urged Irish banks to utilise the facility to the maximum extent possible with a view to making the additional funding available to SMEs as soon as possible. It is pleasing to note that a number of banks have announced their intention to do so.

The scheme requires each covered institution to comply with the Irish Banking Federation code of practice on mortgage arrears and the Financial Regulator's consumer protection code. My Department and the Financial Regulator are monitoring the operation of the scheme.

As regards re-capitalisation, I said on 28 November that in certain circumstances it would be appropriate for the State to consider supplementing private investment with State participation, where in doing so the aim of securing the financial system can be better met.

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