Bernard Durkan (Kildare North, Fine Gael)
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Question 97: To ask the Minister for Finance when it is expected that traditional banking and lending practices are expected to become operational; and if he will make a statement on the matter. [12739/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The primary objective of the Government is to secure and maintain the financial and economic position of the State. Significant steps have been taken to achieve that objective including the Bank Guarantee Scheme and the recapitalisation of Ireland's two main banks. An essential element of the recapitalisation scheme, which I expect to be implemented in the very near future, anticipates the banks involved increasing the level of credit available throughout the economy. As part of the recapitalisation measures, the recapitalised banks have committed 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. Compliance with this commitment will be monitored by the Financial Regulator. An independent review of credit availability, funded by the banks but managed jointly by the banks, Government and business representatives is also underway 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.

The Financial Regulator has also worked closely with my Department to introduce two new codes. The code of conduct for business lending 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 second code covers mortgage arrears and is designed to ensure that mortgage lenders take action to assist householders who are in arrears and will apply to all mortgage lenders, including banks, building societies and retail credit firms.