Mary Coughlan (Donegal South West, Fianna Fail)

The central objective for Government is the provision of normal credit on fair commercial terms in our economy to all viable large, medium and small businesses. It is critical that our banking system is again fully fit for purpose, whether in providing working capital, new loans or other credit facilities to businesses. The relationship between banks and businesses needs to be fully restored, and built on trust and economic and business realism. There is no doubt that banks are making significant credit available to businesses, albeit in the context of a decline in demand for credit against a background of slower economic activity. The independent reviews of bank lending carried out by Mazars show clearly there are reductions in lending volumes going to businesses. Against that, we are all well aware of the demands from businesses for greater access to bank credit, in particular for working capital needs.

The Government has taken a range of actions to sustain the banks and facilitate the flow of credit to the wider economy. The bank guarantee scheme, the bank recapitalisation scheme, the nationalisation of Anglo Irish Bank and the massive effort we have put into the entire NAMA process all have the single purpose of getting our banking sector supporting the wider economy. As the Taoiseach has already announced, the Government's plans to restructure the banking sector are imminent and will be announced over the coming weeks. Further recapitalisation of the banks may feature as part of these plans.

The Minister for Finance, Deputy Brian Lenihan, will issue guidelines shortly in order to ensure that businesses will have recourse to an independent external review of decisions of credit refusal by the NAMA participating banks. It is hoped that banks not participating in NAMA or covered by the Government guarantee will also decide to join the system. The aim is to have a simple, effective review process, run by people with experience and credibility. The banks must comply with the recommendations of the review process or explain why they will not do so. In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help to determine what further action might be necessary to secure the flow of credit. The Minister for Finance, Deputy Lenihan, intends to publish the analysis from the review process in order that the performance of the banks participating in NAMA will be clear to all.

Within my own Department, the enterprise development agencies such as Enterprise Ireland, FÁS and the county and city enterprise boards have continued to assist enterprises through their grant and advisory schemes. Significant allocations were made in my Department's Estimates for 2009 and 2010 to sustain the work of these agencies. The enterprise stabilisation fund and the employment subsidy scheme are additional measures to make funding available to assist SMEs through their current difficulties.

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