Michael D Higgins (Galway West, Labour)
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Question 26: To ask the Minister for Finance the position regarding the funding difficulties facing Irish small and medium enterprises; the way these difficulties are evolving; the steps he is taking to ease them; and if he will make a statement on the matter. [12330/09]

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.

Government Departments and State agencies have engaged with banks and business representatives in a variety of settings on issues surrounding the flow of credit for business. A formal structure for those contacts on an ongoing basis will be finalised shortly. An independent review of credit availability, funded by the banks but managed jointly by the banks, Government and business representatives, is also under way.

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 will apply 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.

Furthermore, a €100 million environmental and clean energy innovation fund has been established by each of the recapitalised banks. A quarterly report to the Financial Regulator of the loans made and the purposes for which they have been made will be required. The banks have also agreed to each provide €15 million to a new seed capital fund with Enterprise Ireland. The banks funding will be matched as appropriate by funding under Enterprise Ireland's Seed and Venture Capital Programme and/or by funding from other national or international investors. It is expected that much of these funds will be utilised by SMEs.