Mary Upton (Dublin South Central, Labour)
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Question 190: To ask the Minister for Finance if, in view of the protection of the banking system, as evidenced by the bank guarantees, recapitalisation and nationalisations, he will intervene to stop banks unfairly cutting overdraft facilities for small and medium enterprises; if his attention has been drawn to the fact that this is driving many otherwise going concerns into receivership as they do not have access to cash flows; his views on whether, in view of the blanket guarantee offered to banks, that they should be required to support businesses that have the ability to remain profitable and stimulate employment and trade; and if he will make a statement on the matter. [3128/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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It is Government policy to support measures to ensure the flow of credit to the enterprise sector, thereby supporting small business and related employment. Through the introduction of the Bank Guarantee Scheme, the recapitalisation package and the nationalisation of Anglo Irish Bank, the Government has sought to sustain an environment where banks can continue to support economic activity through their credit policies.

The recapitalisation package for Allied Irish Bank and Bank of Ireland announced in December included a credit package. One of the requirements of the credit package is that the banks will provide at least 10% more capacity for lending to small and medium-sized enterprises (SMEs) in 2009, subject to demand.

In addition, a Code of Practice on Business Lending is in preparation and will be introduced very shortly by the Financial Regulator. This will be legally binding and will set new standards for the recapitalised banks in dealing with their SME business customers. I am advised that the new Code will cover issues such as new lending, amendment or withdrawal of credit, security/collateral, notification and communication requirements, and a complaints procedure.

My Department and the Financial Regulator will be monitoring the application of the Code and the extent of credit being provided to small businesses throughout 2009 and will be following up with the banks as required.