Dáil debates

Thursday, 10 July 2014

Strategic Banking Corporation of Ireland Bill 2014: Committee Stage (Resumed) and Remaining Stages

 

4:20 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael) | Oireachtas source

With regard to the issue of SME debt, it should be noted that the Central Bank does not publish figures on arrears on non-performing loans specific to the SME sector. In June 2013, the Central Bank set quarterly institution-specific performance targets for covered banks to move distressed SME borrowers onto long-term forbearance solutions. The targets set reflect the banks' capacity and processing systems. The Central Bank has informed the officials in the Department of Finance that the banks have reported that they have met their required targets to date. This perspective has been re-affirmed by both the IMF and the European Commission, who report that the work-out of SME arrears is progressing and that imposed targets are being met.

Recently published results from the covered Irish banks indicate that both banks are well advanced in restructuring their SME loan books. Bank of Ireland's most recent published results indicate that it has reached resolution in 90% of distressed SME cases. Similarly, the AIB results indicate a resolution level of approximately 65%. It is also worth noting that defaulted loans for both banks have reduced year on year.

The Central Bank's process of assessing financial institutions in their efforts to move the stress tests of re-borrowers onto longer term sustainable solutions is an important element in assisting SMEs to potentially transition from a distressed to a more sustainable state, and will continue in 2014. Additionally, the Government's decision to fast-track legislation to allow small companies, as defined by the Companies Acts, to apply to the Circuit Court for examinership and the ongoing work of the Credit Review Office, which has been given an expanded remit, are all initiatives that will assist viable SMEs in addressing their debt situations.

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