Batt O'Keeffe (Cork North West, Fianna Fail)

The Government's actions today are the culmination of painstaking analysis and detailed consideration of the measures necessary to restore our banks to fit-for-purpose institutions that can support economic development and the growth of enterprise.

Our actions today are necessary for the longer term economic stability of our nation which has been recklessly undermined by irresponsible property lending practices and corporate sector greed. I commend the efforts and hard work of my colleague, the Minister for Finance, and his officials, in bringing these banking solutions before the House.

The parallel announcements earlier today by the National Asset Management Agency, NAMA, and the Financial Regulator set the full context in which the Government is making extra resources available to some banks. No Irish person wants to carry the burden placed upon us by reckless bankers. However, without a functioning banking system, our full economic recovery would not be possible. We need adequately resourced and financially sound banks to support the financial needs of businesses and householders.

Similar to the earlier recapitalisation scheme, the Government has again included in this recapitalisation plan explicit provisions targeted directly at supporting our enterprise sector, especially small to medium-sized enterprises.

Under the terms of today's recapitalisation plan, Bank of Ireland and AIB will be required to make available more than €3 billion in lending to new small and medium-sized enterprises, SME, to include working capital this year and next year. This figure will be reviewed as the needs of the economy change. The two banks must each produce a plan that includes a sectorial and geographic breakdown of how they intend to divide up this new lending.

As part of his remit, the credit reviewer, Mr. John Trethowan, will assess these plans following which the Government will decide whether further action on sectorial targets is required.

The two banks will also need to make available €20 million each for seed capital to be provided to Enterprise Ireland-supported ventures and to make up to €100 million each available for environmental, clean energy and innovation funds. That is in addition to the €100 million each made available in accordance with the previous recapitalisation scheme.

The two banks will be required to commit resources to work with Enterprise Ireland and the Irish Banking Federation to develop sectorial expertise in the modern growth sectors of the economy, how best to develop the range of banking services that Irish SMEs trading internationally will need to develop and bring forward new credit products in areas where expected cash flow, rather than property or assets, will be the basis for business lending.

I welcome the formal appointment of Mr. Trethowan as credit reviewer to provide for an independent review of decisions by participating institutions to refuse or withhold credit to SMEs, farm enterprises and sole traders. This facility should afford individual businesses an opportunity for third-party review of bank refusals to grant credit. Participating institutions are required to comply with the recommendation of the reviewer or explain why this would not be appropriate. Statistical outcomes for each bank will be made public.

These measures and more reinforce the Government's commitment to supporting businesses, especially SMEs, a key priority for me as Minister for Enterprise, Trade and Employment. Last year and this, my Department has made approximately €1 billion available in the capital budgets of the enterprise development agencies to fund financial supports to enterprises, including SMEs.

Enterprise development agencies such as Enterprise Ireland, IDA and the county and city enterprise boards have continued to help businesses through their grant and advisory schemes.

Last year, the enterprise stabilisation fund was introduced which aims to support viable but vulnerable companies in financial difficulty as a result of these unprecedented economic times.

Companies receive funding to support a range of activities, including market development, productivity improvements and development. Last year, €58 million was spent on 181 projects supporting approximately 7,500 jobs. The fund continues to attract a high volume of applications this year.

The employment subsidy scheme was launched last August to keep in jobs workers who might otherwise have been made redundant. Other initiatives included developing intellectual property assets; mandating comprehensive strategy reviews in IDA Ireland, Enterprise Ireland and Shannon Development; establishing a code of conduct for business lending to SMEs; and setting up a credit supply clearing group.

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