Seán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

I welcome the opportunity to speak at the conclusion of this debate. The message from the beginning of the debate right through to the end is that we all recognise that accessing credit remains very difficult for businesses and personal customers throughout the country. The continuing decline in the number of banks operating in the Irish economy, particularly in the retail sector - it has decreased again recently - will increase costs for businesses and individuals and will reduce choice and competition in the banking sector. Most people recognise the importance of credit for small and medium sized businesses, which have a key role in sustaining economic recovery and supporting job creation. I will not repeat the statistics about the number of jobs created in small businesses compared to large businesses. Everybody knows that hundreds of thousands of people are working in small and medium sized enterprises.

It was troubling in recent days to read about the release of a report by ISME suggesting that 57% of its members have been refused credit in recent months. ISME has also reported that the average time taken to process loans has increased from four weeks to five weeks. That is difficult, but the real difficulty is that 31% of ISME members have had their overdrafts reduced. That is the real sickener. If a company is operating on an overdraft of €50,000 and is working up to that limit, it will not be able to pay the following week's wages if that limit is suddenly cut to €30,000. Such actions on the part of the banks are squeezing businesses and business owners. The reality is that in these circumstances, the banks tend to seek more guarantees. They will seek a personal guarantee before they agree to increase or extend an overdraft. They will seek to bring under guarantee any personal assets that are not under guarantee. That gives them more collateral to back up their loans. When they have people fully on the hook with nothing left, they can do what they like and many of them do.

The withdrawal from the Irish market of Danske Bank and ACC-Rabobank has resulted in a loss of competition. We have been left with three banks - AIB and Permanent TSB in one group, Bank of Ireland and Ulster Bank, which is part of the Royal Bank of Scotland group. That group is currently assessing its business model in Ireland. I hope it will stay here because it has had a good history in this country. Ulster Bank should have a bright future here. We know that Permanent TSB is struggling with its tracker mortgages.

A normal competitive banking situation no longer exists in Ireland. That is the most important statement that people have to recognise. The economy is on the mend but the banking system is not matching that. A new force is needed in Irish banking, especially to assist small businesses.

My colleague, Deputy Ó Cuív, mentioned the role of the ACC, which provided great assistance to people in the agriculture and food sectors. I remember when the ICC used to help small businesses. Fóir Teoranta also helped many small businesses through difficult periods and they came out successfully at the far side. They are all gone now. We need a State-backed bank for enterprise to help growing businesses to invest. We need to close the lending gap that now exists in Ireland. There is also an experience gap in the banks because so many of them were heavily involved in the property market for a long time. They have been trying to deal with the mortgage arrears issue for the last couple of months. They do not have the business expertise they used to have many years ago.

Many small businesses have a considerable number of non-core business loans. They may have taken them out for property development, which perhaps they should not have done, but they are tied with them now. These non-core business loans are crippling their businesses and they need to give personal guarantees. Many are having trouble keeping up repayments on these non-core business loans and it is making it difficult even to keep their tax up to date. These loans are starving companies of working capital. We need a mechanism whereby the property loans that are not connected to the day-to-day activity of the business are separated from the business activity, allowing the business to continue to work.

We need a new enterprise bank that concentrates on small businesses and lends up to approximately €5 million. It should not be a grant-giving organisation. It should provide advice to customers on the business environment. There should be a rigorous assessment of the economic prospects of the companies involved. There would be no soft money here, but money available for good and viable businesses. No property loans should be given. It is important that it would be strictly for the core business to ensure businesses can thrive and employment can grow.

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