Enda Kenny (Mayo, Fine Gael)

It is important to distinguish between a meeting of the economic management council, EMC, and a meeting between the council and a group or organisation. The EMC is a sub-committee of the Cabinet. Essentially, its purpose is to deal with issues that will, if approved at the EMC, go on to be raised at Cabinet and dealt with in the same way as other issues brought to a Cabinet meeting. The EMC has met the banks on two occasions. The first meeting was on 9 November. The other meeting took place last week on 21 February. Meetings took place separately with Ulster Bank, Bank of Ireland and Allied Irish Banks. The issues raised included SME credit, mortgage credit, mortgage arrears strategies and so on.

The kind of issues that were raised concerned how banks are ensuring the targets they have set out will be met and practical initiatives to assist SMEs access credit. As the Deputy knows, both pillar banks said they intend to lend €3.5 billion in new lending this year. The meetings were very constructive and there is a realisation that banks must get back into the business of explaining to people that they are open for business. I had the opportunity of launching a small enterprise yesterday in the west, which had secured a loan from Allied Irish Bank. That enterprise is taking on 15 new employees and hopes to grow the business over the next period. The issue of SME credit was also raised and the willingness of the banks to implement and support the Government's initiatives set out in the action plan, for instance, the micro-finance agency, a partial loan-credit guarantee and access to the credit review office, which has done a remarkable job. In that context, the Minister of State and the person with responsibility for the banking sector in the Department of Finance were in Cork yesterday and are in Waterford today talking to businesses and banks about that access.

Deputy Adams raised the issue of mortgage credit and asked how banks are ensuring that credit is available to support the Government's important budget initiative. We asked what checks and balances are there to ensure the conditions that apply to mortgages are fair and balanced and not unduly restrictive, whether banks are monitoring the different outcomes between regions and the movement of houses in the north west or the west, the south west or the south east as against the Dublin area. They have all that evidence and we are eager that they will support the mortgage interest relief initiative. With regard to mortgage arrears strategies, the banks are setting out to deal with issues on a case by case basis, taking into account the Keane report, personal insolvency and how best to implement a strategy of dealing with individual cases where circumstances are always different.

One of the issues that came to light is that there is a significant number of small and medium enterprises where the principal person is working hard at driving the business but when the accountants do the books at the end of the tax year, there is often no projection for cash flow for the period ahead. Clearly, in the past when businesses approached banks seeking loans, the approach was based on property assets and the like and money was made available on that basis. However, valuations are much lower now and that no longer applies. Where no cash flow projections are available, this makes it difficult for banks to lend in the circumstances. Therefore, where this applies within the small and medium enterprise sector, it must be rectified so that when people look for loans and opportunities the application will be turned around quickly.

We asked questions about what leverage and authority local bank managers have and what was the level of the loans with which they could deal and whether they could deal with unstructured loans of up to €50,000. We asked what the position was in respect of bigger loans and whether they had to revert along the line and how fast applications could be turned around. They pointed out there was a single application form and that they were interested in getting out among the community again to talk about the capacity of the banks to lend and the availability of moneys.

We also discussed the question of the quite substantial deposits flowing back into banks, which are a signal and sign of confidence returning. The meetings were, in that sense, constructive. The point was made that the boards have changed, personnel have changed and banks are anxious to get back into the business of being available to the people to lend under proper conditions and to have a thriving banking system and economy.

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