Billy Kelleher (Cork North Central, Fianna Fail)

I welcome the opportunity to speak on this important issue. There is much anger out there among the public and among commentators about the behaviour of individuals in the banking system and the culture that was quite prevalent in certain aspects of banking. This has done untold damage in the sense that it has undermined confidence and credibility, not only in the banking system but in the regulatory system overseeing it. Everybody accepts that. What we need now, however, is action to address the fundamental problem of the lack of working capital which can filter down into the real economy. That is why today's decision is of fundamental importance.

A key principle of the recapitalisation package is the recognition of the importance of business lending, particularly with regard to small and medium-sized enterprises. They are central to our economy, and the provision of bank credit to the sector is a primary target of the overall package. The package contains a range of initiatives which will directly assist our enterprise sector. The recapitalised banks have committed to increasing their lending capacity to small and medium-sized enterprises by 10% over 2008 figures. This should ensure that sound businesses will receive support from their banks, which have committed to public campaigns to actively promote lending to small and medium-sized enterprises. There is also scope for increased levels of lending to SMEs if mortgage lending is not taken up. Compliance with this commitment will be monitored by the Financial Regulator. The banks have agreed to make quarterly reports to the financial regulator, with the first report to be submitted by the end of April 2009.

Small and medium-sized enterprises are also covered by the proposal to have a code of conduct on business lending to SMEs. This will be introduced by the end of the week by the Financial Regulator. The intention is that this code will extend beyond the recapitalised banks and embrace the key credit providers. The code will have the effect of law and its objects will be to facilitate access to credit for sustainable and productive business propositions; to promote fairness and transparency in the treatment of SMEs by banks; and to ensure that when dealing with arrears cases the aim of the bank will be to assist borrowers in meeting their obligations or otherwise deal with the situation in an orderly and appropriate manner. The code should strengthen the bank-client relationship and result in the development of greater trust and confidence in the bank's lending practices. Lenders covered by the code will be required to offer their customers the option of an annual review meeting to include all credit facilities and security, including collateral. They also will be required to inform customers of the basis for decisions made and to have written procedures for proper handling of complaints. Where a customer gets into difficulty the banks will seek to agree an approach to resolve problems and provide reasonable time and appropriate advice. That is an important aspect of the recapitalisation plan.

There is no doubt small and medium-sized businesses are being squeezed through not having enough working capital to function properly in the current climate. This is having major ramifications in terms of undermining competitiveness and the subsequent loss of jobs. As Minister of State with responsibility for labour, I am acutely aware, as are most Deputies in the House, of the impact of the global recession in the context of the downturn in the broader economy and its impact on employment prospects. In recent months we have seen a haemorrhaging of jobs. I do not think I need to tell anyone in the House that this is to continue for some time. We must be resolute in how we deal with these issues. The central requirement in addressing the difficulties in the broader economy is to have a vibrant banking sector that is capable of lending to small and medium-sized enterprises and to individuals in the form of mortgages. This might give some stimulus to the broader economy.

There is another area on which I would like to see the banks focus. Many companies are struggling and I am concerned that too much emphasis is put on start-up businesses rather than the support of existing business. Banks need to have regard to businesses that are struggling or are not as viable as they were in previous times. It is more often than not easier to retain employment than to create it in difficult times. I hope the banks will be conscious of that.

We on this side of the House have made a difficult decision on the introduction of the pension levy, which places a burden on ordinary working families. I accept that. We know why we did it and we have tried to explain it. Equally important, however, if we are serious about having a social solidarity and partnership pact, it is fundamental that we address the issue of remuneration of executive and non-executive directors in the banks and broader corporations. I believe the remuneration package of a reduction of salaries and bonuses to executive and non-executive directors of 33% and 24% that has been announced is not enough. A surtax should be placed on the salaries and bonuses of executives and non-executives. Let us be honest, there are many other perks that go with these——

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