Thursday, 10 July 2014
Strategic Banking Corporation of Ireland Bill 2014: Committee Stage (Resumed) and Remaining Stages
Debate resumed on amendment No. 6:In page 6, between lines 16 and 17, to insert the following:“(2) Following the passing of this Act the Minister shall direct the Central Bank to publish the SME debt restructuring targets for banks and the performance of the banks in reaching these targets on a quarterly basis.”.-(Deputy Pearse Doherty)
First, the proposed amendment is well beyond the Long Title of the Bill. To use this legislation as a vehicle to compel the Central Bank to publish statistics about the restructuring of loans would certainly be in the Long Title of the Bill, so it is not an appropriate amendment.
Second, as the Central Bank is an independent body and is already equipped to deal with such matters, it would not be appropriate or, indeed, legal for us to seek to direct it in the manner in which it communicates information as it exercises its independent functions.
I know it is beyond the scope of the Bill in terms of the Long Title, but we can change the Long Title on Report Stage if we wish. That is clear. The point is that this is relevant to what we are discussing here. Whether it is the Central Bank or the Minister directing it to do so is immaterial, and obviously there is an issue in that regard, but the real issue is that these targets should be published, and the Minister can ensure they are published. The mortgage arrears targets are published on a quarterly basis. The Department of Finance publishes its own figures.
I hope the Minister will go beyond the reasons he has given for not doing this in his next contribution. Why should we not publish the quarterly targets set down by the Central Bank? Does the Minister think it is not in the public interest to have them disclosed and published, so we will be able to measure whether the banks are dealing with this in an appropriate way and with the appropriate actions? Does he believe it is best that they are kept private? In light of the fact that we are establishing a company which will on-lend to some of the institutions that have targets laid down for them, does the Minister not think it is appropriate that transparency be brought to this issue at the time the company is being established?
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.
In case I missed it, does the Minister believe these targets should not be made public? Does he believe the targets should continue to remain private or that we should have transparency in respect of the pillar banks as to what the targets are and how they are meeting them?
My position is that it is a matter for the Central Bank, which is independent in the exercise of its functions and which particularly exercises that independence in its dealings with the licensed banks, to which it provides the licences.
It is a joke that we are required to put through a legislative measure of this importance in this manner. It is unacceptable and farcical and we really should not accept it. We have dealt with only six amendments and other important amendments will not be even debated. I do not wish to use all the minutes remaining but I have some practical questions for the Minister. Will there be minimum loan amounts under these products?
Who is the Minister targeting here? Is it the medium size enterprises? Is a minimum loan of €50,000 or €100,000 envisaged in respect of the loan products that will be made available? Again, there is the question of when it will move from being only available for investment purposes to being available for working capital for businesses.
This has been a farce. It is terrible that the Minister has allowed this Bill to be guillotined in this way. I do not oppose this Bill and I believe most Members of the House support the concept of the Bill. However, it is very bad when we have not got past section 2 of the Bill. It is appalling. We genuinely wanted to tease things out so we would have a better understanding in trying to improve the Bill, if needs be.
Given we are to have no further discussion, once this is established when do we expect that SMEs will be able to apply for credit under the Bill?
I want to echo those points. I said at the start that I will support the Bill and I will do so because I agree with what the Bill is trying to achieve. However, honest to God, this is a €5 billion fund for lending to SMEs with up to €4 billion of a State guarantee provided by the Minister for Finance, with no ratification by Dáil Éireann. This is absolutely no way to do business. I cannot understand it. We are clearly interested and we are clearly trying to improve the legislation. Maybe the Minister can tell us why Dáil Éireann does not get time to debate a €5 billion Bill that, critically, has a €4 billion State guarantee attached to it. It is an outrage.
I am absolutely stunned. I am more stunned than I was at the start about the guillotine because I was under the impression that this was at least going to run until the close of business at 7 p.m. today. Now, we discover it is finishing at 4.40 p.m.
It is absolutely shocking that the Government is doing this. It is cynicism beyond belief. It is bad enough that we would not have got through all the amendments but the fact we have not even got to the issue of the guarantee is shocking. This is €4 billion that we could guarantee after what guarantees did to this country, and the Minister has the right to give these guarantees to foreign and private investors. It is extraordinary that we did not have a chance to debate amendments on that issue and other important aspects. It is a shocker. It really is disgraceful cynicism. I believe cynicism lies behind it, which is even worse when we are dealing with such important matters.
As it is now 4.42 p.m. I am required to put the following question in accordance with an order of the Dáil of this day: "That each of the sections undisposed of is hereby agreed to and the Title is hereby agreed to, the Bill is hereby reported to the House without further amendment, Fourth Stage is hereby completed and the Bill is hereby passed."