Seán Kyne (Galway West, Fine Gael)
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9. To ask the Minister for Finance if he will report on funding through the Strategic Banking Corporation of Ireland for Irish small and medium-sized enterprises and for agriculture; if he is satisfied with the total lending provided; the number of banks and lending organisations that are delivering the funding programme through the corporation; and if he will make a statement on the matter. [40372/15]

Seán Kyne (Galway West, Fine Gael)
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This question relates to the Strategic Banking Corporation of Ireland and funding through it for SMEs in agriculture. Can the Minister report on the total lending provided, whether he is satisfied with the level of funding and whether other banks or lending organisations will be eligible to engage in that process and lend?

Michael Noonan (Limerick City, Fine Gael)
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I thank Deputy Kyne for this very important question. The Strategic Banking Corporation of Ireland, SBCI, was formed in late 2014 and began lending in March of this year. The SBCI makes its funds available to SMEs through lending partners known as on-lenders, the first of which are Bank of Ireland and AIB. The SBCI has made considerable progress in providing finance to Irish SMEs. To the end of September of this year, the SBCI has lent €110 million to over 3,200 SMEs across Ireland and to all sectors of the economy.

It may interest the Deputy to know that the SBCI has developed a tailored agriculture investment loan. This product is available for investment by agricultural SMEs involved in primary agricultural production, the processing of agricultural products or the marketing of agricultural products. The loan can be for amounts of up to €5 million with a loan maturity of between two and ten years. To date, approximately one third of the SBCI's total lending has been to SMEs in the agri sector who have taken out agriculture investment loans. I understand that the SBCI intends to publish further detailed lending results for 2015 in early 2016.

The Government's aim for the SBCI is to increase the provision of finance to Irish SMEs and to provide such finance at a lower cost and on more flexible terms than were available in recent times on the market. Additionally, it is intended that the SBCI will foster greater competition amongst finance providers in the market. The SBCI is achieving this by working with existing and new providers to develop enhanced products and by supporting new entrants to the SME lending market.

In this regard, the SBCI has recently announced new on-lending agreements with two non-bank lenders, Finance Ireland and Merrion Fleet. This is a key step in creating greater competition for SME lending in the Irish market and providing funding for a broader range of products including asset finance, leasing and contract hire.

Additional information not given on the floor of the House

The SBCI is in advanced discussions with a number of other bank and non-bank lenders and it is anticipated that further announcements of new on-lending agreements will be made in the coming months. The SBCI is committed to leveraging existing and new relationships with on-lending partners to support SME growth and investment through the provision of lower cost and longer term funding. To date, the SBCI has committed a total of €475 million for on-lending to Irish SMEs, out of its current funding capacity of €800 million. The SBCI has made significant progress over its first seven months of operations, both in terms of providing funding to SMEs and building a strong infrastructure through which it will continue to provide long term support to SMEs.

Seán Kyne (Galway West, Fine Gael)
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I thank the Minister for his reply and commend him on his role in the establishment of the SBCI in conjunction with the EIB, the German state bank and the German finance minister. I welcome the amount of loans that have been made, up to one third in the agri sector which has been a powerhouse of job creation over the past number of years. It is great to see that this level of investment and lending is possible through the SBCI.

I understand that banks are obliged to inform applicants of the possibility of SBCI loans where the terms of their own loans are not agreeable or they are not agreeable to lending. Is this happening in all cases? Does the Minister envisage even more lending organisations coming to the fore over the next number of years in terms of providing increased competition notwithstanding the bodies he has listed?

Michael Noonan (Limerick City, Fine Gael)
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I understand that Bank of Ireland, AIB and the two non-bank on-lenders are honouring the terms of the protocols they have entered into. I hope that there will be more on-lenders. I know that the SBCI is in advanced discussions with a number of other bank and non-bank lenders. It is anticipated that further announcements of new on-lending agreements will be made in the coming months. In terms of advertising the availability, apart from the obligation on the banks to inform customers, many of the trade organisations and representative bodies are fulfilling a role of providing the information.

The Irish Farmers Association, IFA, and the Irish Creamery Milk Suppliers Association, ICMSA, for example, are doing it in the agriculture sector. The Irish Business Employers Confederation, IBEC, is certainly doing it for small and medium enterprises, SMEs, and the Small Business Association is also doing it. There is significant take-up across the sectors but the agriculture sector took the lead. Dairy farmers, in particular, are gearing up for the non-quota days and there is very significant investment going into dairy farms.

Seán Kyne (Galway West, Fine Gael)
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I thank the Minister for his reply. Does he envisage any increased role for the credit unions in respect of SME lending? There has been speculation about this and there was a pilot programme in Kilkenny. Does the Minister envisage any role, maybe not at the level of €5 million but for smaller loans because credit unions are very interested in getting involved in this area?

Michael Noonan (Limerick City, Fine Gael)
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The credit union movement is an admirable one and we are lucky to have it in Ireland because it is a source of credit for many people who would not normally interact with banks. I am a very strong supporter of the movement. Last week I met with the representatives of the two main credit union bodies, together with a representative of the Credit Union Managers Association, to discuss the Credit Unions and Cooperation with Overseas Regulators Act 2012, the final part of which will be signed into law at the end of the year. We discussed various implications and minor difficulties that need to be ironed out in advance of that. I also indicated that we would review the implementation of the Act and that we would further consider extending the role of the credit union into the areas the Deputy suggests.