Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I thank the Ceann Comhairle and his office for allowing me to raise this issue. The Minister will not be surprised that I am raising it again. Small to medium-sized enterprise, SME, debt, particularly in light of the impending sale of many SME loans to foreign holdings, is the forgotten crisis in Irish banking. There has been an understandable focus on mortgage debt and the buy-to-let sector, but banks that are in some cases exiting the Irish market or reducing their services have in recent months begun selling the loans of many small companies and local businesses throughout the country to outside funds. A number of high-profile large companies have gone to court, incurring significant legal expenses. When loans are sold, businesses find that the protections offered under their original loan agreements are not as robust as they were led to believe or as the Government would lead us to believe.

The lack of consultation and alternative funding is frustrating. In the cases that I have dealt with, the pillar banks of AIB and Bank of Ireland have been willing to put new facilities in place. However, banks that are exiting the market - in the cases I am referencing, Ulster Bank - are pursuing an agenda of getting out of business lending and answering to targets set in another jurisdiction and are not interested in sitting down to deal with borrowers. In the two cases I am dealing with, 50 jobs are in danger in both for want of a fairer banking deal and competitive banking facilities.

The Minister of State, Deputy Nash, committed to having the credit guarantee scheme revised to allow for a provision whereby participating banks in the scheme could fund businesses whose banks were exiting the market. However, Ulster Bank's customers are falling through the cracks even though it participates in the scheme. Where it sells a business loan to a fund, provision is not being made. If the business were a customer of Danske Bank or Bank of Scotland, provision would be made automatically.

The Minister's Department has been under significant pressure due to the Companies Act 2014 and various industrial relations Bills, but it is outstanding that the review of the credit guarantee scheme has not yet been delivered.

Likewise, as we enter the summer term, it is clear that several of the commitments in the legislative programme will not be delivered. In the meantime, only 162 facilities have been agreed under the credit guarantee scheme in the four years since it was established. That is way below where we and the Minister want it to be. The lack of urgency within the Department towards addressing this issue is a cause for great concern. While there is political awareness and concern around SME debt, the system does not really understand the problem or the urgency of it.

We need the Minister to press home the message within his Department that this is an urgent issue which will affect employment and the ability of many businesses to gain from whatever recovery is beginning to take hold. There is no longer any opportunity for delay. The figures for 2014 show that 40% of SME debt in the pillar banks was in long-term arrears. In 2013, Fiona Muldoon, then a senior official in the Central Bank, indicated that some 50% of SME debt was impaired. We need action on this issue now. There must be alternatives available to businesses that have managed to trade through very difficult years and now need some type of break to help them to deal with a circumstance for which they are not responsible.

See this speech in context