Richard Bruton (Dublin North Central, Fine Gael)
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Question 93: To ask the Minister for Finance the progress made to date in benchmarking the availability of credit from banks which are to receive State recapitalisation; if this procedure examines loans approved and loans declined and creates a fair set of criteria for judging whether the recapitalised banks are successfully restoring the flow of credit; and if he will make a statement on the matter. [12294/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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As part of the recapitalisation package announced on 11 February, Allied Irish Bank and Bank of Ireland reconfirmed their December commitment to increase lending capacity to small and medium enterprises (SMEs) by 10% and to provide an additional 30% capacity for lending to first time buyers in 2009. If the mortgage lending is not taken up, then the extra capacity will be available to SMEs. AIB and Bank of Ireland have also committed to public campaigns to actively promote small business lending at competitive rates with increased transparency on the criteria to be met. Compliance with this commitment will be monitored by the Financial Regulator. The banks will make quarterly reports, with the first report to end March 2009 to be submitted by end April 2009. Both institutions have met with officials from my Department to give details of the steps they are taking to implement these measures.

An independent review of credit availability, funded by the banks but managed jointly by the banks, Government and business representatives is also under way and will be completed shortly. Amongst the issues covered by this review will be changes in bank lending, repayment terms and a comparison with customer experiences prior to the onset of the financial crisis. I am satisfied that this review, along with the quarterly reports from the recapitalised institutions, will give a clear picture regarding the flow of credit in the Irish economy.

I should also add that a Code of Conduct for Business Lending to Small and Medium Enterprises was published by the Financial Regulator on 13 February and took effect on 13 March. This code applies to all regulated banks and building societies and will facilitate access to credit, promote fairness and transparency and ensure that banks will assist borrowers in meeting their obligations, or otherwise deal with an arrears situation in an orderly and appropriate manner. The business lending code includes a requirement for banks to offer their business customers annual review meetings, to inform customers of the basis for decisions made and to have written procedures for the proper handling of complaints. Where a customer gets into difficulty the banks will give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice. This is a statutory code and banks will be required to demonstrate compliance.