Brian Lenihan Jnr (Dublin West, Fianna Fail)
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A core Government objective is to free up lending on a commercial basis into the economy to support economic growth and a number of actions have been taken to achieve this objective. In the context of the bank guarantee scheme and recapitalisation the banks have made important commitments to support business lending.

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.

In addition, 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 is being monitored by the Financial Regulator. Officials from my Department are also in regular contact with the banks concerned in relation to their progress on implementing these measures.

My colleague the Tánaiste and Minister for Enterprise, Trade and Employment has recently set up a clearing group including representatives from the main banks, business interests and state agencies, which is chaired by officials in the Department of Enterprise, Trade and Employment. The purpose of the group is to identify specific patterns of events or cases where the flow of credit to viable businesses appears to be blocked and to seek to identify credit supply solutions. Any questions on the clearing group should be directed to my colleague the Tánaiste and Minister for Enterprise, Trade and Employment.

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 which will inform future policy.

The banks report that they are "open for business" as evidenced by their promotional and advertising material. The banks state that they have funds available for lending to businesses and have provided details on approval levels and amounts drawn down. They report a slowdown in certain areas which they say reflects a reduced level of demand. The review of credit availability will consider this aspect. The most recent Central Bank Monthly Statistics for May 2009 show that credit to non-financial corporates actually increased by €225m month-on-month after two months of substantial falls. While care is always to be taken when reading monthly data, this could be a positive indicator of credit actively being fed through the real economy and businesses.

You may also be aware that my colleague, the Minister of State for Trade and Commerce, Mr Billy Kelleher TD has commenced a series of regional meetings to discuss access to bank credit with key local stakeholders.