Brian Hayes (Dublin South West, Fine Gael)

I thank Deputy Ó Caoláin for raising this matter. I did not know of the particular case to which he referred and was interested to learn about it on the floor of the House. It has been well publicised locally and there are many issues which AIB must address. I will raise this matter with the Department of Finance, the Minister for Finance and the Minister for Jobs, Enterprise and Innovation to see what can be done in this specific case.

The Government is acutely aware of the importance of credit to viable businesses and has taken several steps in this regard in its first 100 days. While it has made some progress in this area, it is important we move beyond slogans. The recent report of the credit reviewer, Mr. John Trethowan, shows that in seeking to move forward to ensure a flow of credit that underpins economic growth and jobs creation we are faced by a myriad of challenges and difficulties. These have the potential to impede fundamentally viable businesses in accessing the bank lending they require. An important focus of the Government is, therefore, to identify these impediments and to bring forward appropriate initiatives.

The Central Bank has estimated that for the SME and mortgage sectors, credit of €11 billion to €16.5 billion of gross new lending will be required in total over the next three years. The Government's plan creates the capacity for the pillar banks to lend in excess of €30 billion over the same three year period in SME and other important sectors. In other words, they should be more than able to meet lending requirements. This is only one side of the lending story. Viable businesses must also seek credit and when it is approved by the banks, they must actually draw it down and the relevant funds put to productive use within the real economy.

The Government has agreed that the loan guarantee scheme will be a temporary, partial credit guarantee scheme targeted at market failures resulting from a lack of collateral or banks not being sufficiently focused or knowledgeable in particular business sectors. In line with the recommendation contained in the recent report of the Credit Review Office, an appropriately designed loan guarantee scheme also has a potentially important role in assisting fundamentally viable businesses which have difficulty in obtaining bank finance as a result of their overall level of indebtedness. The Taoiseach reconfirmed his commitment to the scheme as recently as 13 June last. The notice of the competition to design the scheme was advertised on e-tenders on 15 June, with a closing date of 7 July. It is envisaged that the scheme will be up and running in the autumn.

As part of the troika agreement with the EU, the ECB and the IMF, the Central Bank of Ireland has committed to publishing a report on the treatment of loans in arrears under the code of conduct for business lending to small and medium enterprises and aims to provide standards for banks concerning their handling of past due loans of still viable entities and where recovery appears feasible. The latter is particularly relevant in the context of the business entity in his constituency to which Deputy Ó Caoláin referred. The Central Bank's work on the code only at the initial consultation stage at present. However, it will be in place in the autumn. The code will provide a framework within which the banks will deal with SMEs whose loans are in arrears. I must stress that this is not about debt forgiveness for businesses but rather about ensuring that the banks deal fairly and honestly with customers who are in arrears.

As part of the credit suggestions initiative, the Minister requested suggestions from members of the public on what can be done to encourage viable businesses to seek credit. Over 100 such suggestions were submitted by members of the public and the most frequent, relevant and productive of these will be published shortly. These can then be implemented, as appropriate, by the relevant organisation or organisations. This response - which has come about within a very short timeframe - reflects the importance of this issue to small businesses. I wish to record my appreciation to everyone who took the time to submit suggestions.

I wish to make one further point in respect of credit to small businesses. There is a great deal of negative publicity regarding the availability of credit emanating from certain areas and this could discourage people from seeking credit. People should not be afraid to seek credit from their banks. In many cases, they have been good customers for many years and I would expect the banks to stick with them even in bad and difficult times. The banks have received massive support from taxpayers, many of whom own businesses. If a customer is refused credit, he or she should always invoke his or her right to an internal review within the relevant bank. If this is not successful, the Credit Review Office will, on application from the borrower, carry out an independent and impartial review of a bank's decision to refuse or reduce credit.

A number of Ministers have made the point that the Credit Review Office is extremely important in the context of the times in which we live. Where people or small or large businesses cannot obtain funds or have been refused them, it is important that an immediate application be made to the Credit Review Office which can provide an independent assessment as to the merits or otherwise of a case. I would strongly advise anyone who has unsuccessfully appealed through a bank's own internal appeals process to seek a review by the Credit Review Office. It is only when we see independent reviews of refusals of credit that we can assess whether the banks are refusing credit to viable businesses.

I will bring to the attention of the Minister for Finance the constructive suggestion put forward by Deputy Ó Caoláin in order to discover whether we might respond to it in kind.

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