Dara Calleary (Mayo, Fianna Fail)
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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.

Richard Bruton (Dublin North Central, Fine Gael)
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I thank the Deputy for raising this issue. There is no doubt that the funding difficulties being experienced by small and medium-sized enterprises has been a huge issue right through the period of this Government's term in office. We have introduced a great deal of change in an effort to respond to that. The remit of the Credit Review Office has been repeatedly extended, for example, with the limits increased to try to deal with the problem. The Minister for Finance is introducing protections for these types of loan arrangements to ensure the new owners of credit books adhere to the protections that exist under the consumer protection provisions relating to credit servicing. That will be included in the new legislation the Minister is bringing through the Oireachtas.

The Deputy is correct that we have introduced a draft statutory instrument to extend the credit guarantee to exiting banks. That has gone through drafting and is now in the phase where we are rolling out the agreements with participating banks. That process is nearing completion. This was designed to deal with exiting banks, and Ulster Bank, to which the Deputy referred, is not among those banks. We will have to consider the specific circumstances he highlighted to see whether we need to introduce a new statutory instrument. The legislation is at an advanced stage but is proving to be rather complex because it deals with the State giving guarantees, which has given rise to difficulties we have had to work through.

The Deputy rightly identified that we need to look much more closely at what exactly is happening in the case of the Ulster Bank loans to see whether there is a way of accommodating them, either through a new statutory instrument, which would be necessary to extend the remit of existing provisions, or through an instrument introduced when we have the new primary legislation in place. I assure the Deputy that there is no lack of urgency in respect of this issue either in my Department or on the part of Government. This is an area where we are continuing to respond to changing circumstances in the marketplace and seeking to develop instruments that respond to those changes. The introduction of the Strategic Banking Corporation of Ireland is leading to the introduction of new financial instruments into the marketplace. I assure Deputy Calleary that we will be looking closely at these issues. I thank him for bringing specific instances to our attention, which we will pursue with a view to devising a solution. As he knows, resolving these matters requires more than a stroke of a pen. It involves devising a statutory instrument and rolling it out with the banks, which requires putting the necessary legal agreements in place to allow the banks to operate it.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Minister for his reply. The specific problem here is in respect of Ulster Bank. When he discussed the matter with Ulster Bank, it put him in touch with the Royal Bank of Scotland. The latter's argument was that it is under the control of Her Majesty's Treasury and must meet the targets that are set for it in terms of its restructuring. Given that the Minister is reviewing the situation and he accepts we have a specific problem here, could contact be made, at ministerial or official level, outlining that there are specific solutions being devised in Ireland, through the credit guarantee scheme, and asking Ulster Bank to suspend its programme of selling loans, particularly for very small businesses that cannot afford the lawyer's services that are necessary to defend their case?

The Minister referred to consumer protection. There is some protection in place but where we are talking about impaired loans, many of those protections are invalid. An agreement has been made with the Irish banks whereby once a loan is sold, if the business is worth taking apart then the fund will take it apart with no regard for employment or the history and future potential of the business. Given that the Minister recognises there is a specific problem and a particular shortfall in terms of the Department's response, will he consider making an approach to Ulster Bank asking it to suspend its programme? That would have the additional effect of injecting urgency into the rolling out of the legislation.

Richard Bruton (Dublin North Central, Fine Gael)
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We need to have all the facts before we decide on a course of action. It is not true to say protections are worthless where the loans in question are impaired. In fact, there continue to be procedures and protections in place where loans are impaired. I take the Deputy's point, however, and we will look at the situation fully to see what is the best way in which to find a resolution. I will not make any commitments without having the advantage of a proper assessment. I assure the Deputy that we will continue to work on this and I will respond to him either privately or publicly.