Darragh O'Brien (Fianna Fail) | Oireachtas source

Anything that goes some way toward improving the lot of the SME sector is welcome, but while the Bill is welcome, it is most inadequate. In the programme for Government, Fine Gael and the Labour Party promised a strategic investment bank. This is not a strategic investment bank. It is not a bank and the Minister is not applying for a retail licence. The Minister mentioned Chancellor Angela Merkel. This was in his discussions with her. Does the Bill represent the scraps from Chancellor Merkel's table given that she has not seen fit to follow through on the commitment given to the Minister for Finance and the former Tánaiste and Minister for Foreign Affairs and Trade? That commitment was heralded as a seismic shift in the context of the split between banking and sovereign debt and as a matter of crucial importance for Ireland, which is what it would have been. Is this being given by Germany because we are not getting the other deal? I note from the Minister's recent comments that he does not feel we will get that deal. Having said that and while I am not trying to pour cold water over the whole thing, there are valid questions to be asked and I welcome the fact that the Minister is here to present the Bill in person.

In the briefing note prepared by the Department of Finance and in the Minister's speech, reference was made to the potentially lower cost of funding. However, will the Minister insist on and will the SBCI set conditions for the retail banks to which they give money? I refer to loan terms and rates, the conditions applying to loans and the mark up for the banks. The money will be put into the SBCI from three different sources and lent on through our retail banks. Will we set conditions as to what the banks can do with the money and as to how much profit they can make? I note the comments from ISME and Chambers Ireland in that regard. While they have given the legislation a cautious welcome, there is concern that the banks will simply provide this funding to their blue chip customers.

We have an overall issue with debt and access to credit in the SME sector. The Minister's note on the SBCI refers to "more suitable terms and conditions". Will we know what they are at the appropriate time? I do not expect that to be set out on Second Stage, but how do we know that will be the position? Will there be lower costs for the SME sector? How will the Department and the SBCI itself track the money they give to Bank of Ireland or the AIB, for example, to establish what those banks are doing with it? Will they track who the money is being lent to and the rates and terms of loans? Will they track what clients and sectors are being lent to? All of us, including the Minister before he came into government, have shared a great frustration that the banks were set targets which they would not meet. There are question to be asked in this regard and we must ensure that the money, some of which is coming from the National Pensions Reserve Fund and some from KfW, which is fine, is lent for the purposes the Minister for Finance intends. Is there any point in just giving money on more favourable terms to blue chip companies which can access credit elsewhere?

If such a company is currently borrowing from Bank of Ireland, for example, but will now be able to avail of better rates from the same bank through this fund, will it be allowed to eat up large chunks of the funding?

I am not questioning in any shape or form the Minister's motives in bringing forward this legislation. We are all agreed on the need to give further support to small and medium-sized enterprises. That need is there because the banks have failed to fulfil their function in this regard. Time and again they have missed the targets on business lending set by this and the previous Government. My question then - I am certain it is valid, even if the Minister does not - is why we should have faith that they will do the right thing when it comes to this fund.

Will the Minister indicate whether it is his intention, either on a later Stage or after the legislation is passed, to introduce tighter regulation in regard to the operation of the strategic banking corporation of Ireland? What level of reporting will he receive from the bank? Will it be done on a quarterly basis, for instance, and will information on lending be sectoralised according to area of the economy, size of company and so on? Will there be scope for any of these moneys to be used to restructure existing SME debt in cases where profitable and viable businesses are being strangled by the terms of their existing loans? These are the questions we need answered before we can assess whether these proposals will work. The Minister may not have all the answers today, but I hope he will be able to address some of them. We all have genuine concerns as to whether we can trust the retail banks to lend this money into the sectors where it is needed.

The Minister mentioned that new market players will be able to access the fund. That is welcome. However, what is the situation in respect of banks like Ulster Bank which are actively downsizing in the Irish market? Will that particular bank be allowed to access these moneys while at the same time shutting down branches in this State and in Northern Ireland? Is there any intention to require banks accessing this funding to give a commitment to the Irish market into the future? I look forward to teasing out these issues on Second Stage and in due course by way of amendment. I give notice of my intention to bring forward amendments on Committee Stage.