Dara Calleary (Mayo, Fianna Fail)
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1. To ask the Minister for Finance the actions being taken by the State-supported banks and other banks licensed in the State to deal with the level of small and medium enterprise arrears; his views that the delay in dealing with SME arrears is hurting the wider economy; and if he will make a statement on the matter. [28666/14]

Dara Calleary (Mayo, Fianna Fail)
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The question seeks a discussion with the Minister on the level of SME arrears on loans and what plans the Government has to deal with the issue.

Michael Noonan (Limerick City, Fine Gael)
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I thank the Deputy for raising the issue. I am informed by the Central Bank that, in 2012, the bank wrote to each lender active in the SME market requesting they devise strategies and implementation plans for resolving SME debt by making use of longer-term solutions than had been applied to up that point. A key objective of such strategies was to recognise viable businesses and to separate these from overhanging property debt in determining appropriate loan workout solutions.

Resolutions offered to SME customers in difficulty are assessed on the basis of the borrower's maximum affordability. The restructures are often complex due to multiple debt connections. Irish banks are well advanced in restructuring their SME loan books.  I am informed from the latest publicly available information that Bank of Ireland has indicated it had reached resolution in 90% of distressed SME cases and AIB's 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 its efforts to move distressed SME borrowers on to longer-term sustainable solutions, is an important element in assisting SMEs to transition to a more sustainable state.  This work will continue throughout 2014. Additionally, the Government's enactment of 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 expanded Credit Review Office are all initiatives that will assist viable SMEs in addressing their debt situation and, consequently, enhance the employment prospects for the sector as a whole.

In light of the above, I would not agree with the Deputy's assertion that there is a delay in dealing with SME arrears.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Minister. The Central Bank also published a report about SME debt recently which showed that 26% of SME loans by number and 41% by value were in arrears. This is in spite of the figures the Minister has just quoted to the effect that 90% of Bank of Ireland and 65% of AIB distressed SME loans have been resolved.

The issue for the Central Bank is still hugely significant, in particular the overhang in employment prospects. If SME owners are dealing with that, they cannot expand their businesses and they will not expand employment while the issue hangs there. We see some very high-profile, large business people getting significant debt writedowns whereas small SMEs - the Minister and I deal with them every day - are being put through the wringer. I dealt with a case on Monday of somebody with a relatively small distressed loan who had been put through 15 months of a wringer. When one goes through the file, one sees the delaying tactics being employed by one of the pillar banks. It is ridiculous. There is nowhere for that person to go because the person does not want to distress the relationship with the bank.

We still have a problem if we take the figures of 26% of SME loans by number and 41% by value. What value of Bank of Ireland and AIB loans were resolved under the resolution process that the Minister laid out?

Michael Noonan (Limerick City, Fine Gael)
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There is no doubt there has been a very significant problem with debt in the economy, including private debt, SME debt and, indeed, national debt. Plans have been put in place by the Department of Finance and the Central Bank to resolve the debt situation. What I am saying is that progress has been made, not that everything has been solved.

There is no contradiction between the figures the Deputy is giving on the percentage in arrears by volume and by value, and what I am saying, namely, that 90% have been resolved. For quite a long period, even though they are resolved, they are still showing as arrears in the bank books as they are not taken as loans that do not have arrears. It is the same with mortgages. Until the Central Bank does the audit and says the repayment arrangements are sustainable, it still remains in the arrears figures. Of course, we will reach a tipping point where the resolution arrangements will be deemed to be satisfactory and people will continue to pay their loans.