Mary Coughlan (Donegal South West, Fianna Fail)

A properly functioning banking sector is an essential element for the maintenance and development of enterprises, especially SMEs. Government focus has been on creating a fit for purpose banking system as is evidenced by the bank guarantee scheme, the recapitalisation scheme, the nationalisation of Anglo Irish and the establishment of the National Asset Management Agency. Substantial guarantees and funding have been committed to the banking sector in order to keep the banks functioning to support the broader economy.

A key principle of all these actions is the recognition of the importance of business lending particularly to SMEs. Small and medium-sized enterprises are central to our economy and the provision of bank credit to the sector is a primary target of all these initiatives. The banks' recapitalisation package contains a range of initiatives to assist directly our enterprise sector, including that the recapitalised banks have committed to increasing their lending capacity to SMEs by 10% over 2008, which should ensure that sound businesses will receive support from their banks; and a €100 million environmental and clean energy innovation fund is also being established by each bank, as well as a further €15 million each to new or existing seed capital funds. Much of this funding will flow to small and medium-sized enterprises.

SMEs are also covered by the code of conduct on business lending to SMEs. This code, which was published by the Financial Regulator, came into effect on 13 March 2009. The application of the code will promote fairness and transparency in the treatment of SMEs by the banks and should facilitate access to credit.

The recapitalised banks have also agreed to pay for and co-operate with the carrying out of an independent review of bank lending to SMEs. Additional banks have now agreed to participate in this review.

Allied Irish Banks, Bank of Ireland and Ulster Bank will also provide funding for SMEs on foot of a €300 million facility provided by the European Investment Bank to assist developing SMEs.

The banks have undertaken public campaigns to actively promote their lending to SMEs. Recently, they have used recent press and television advertisements and announcements, together with information sessions with businesses, to demonstrate this commitment.

See this speech in context