Paul Kehoe (Wexford, Fine Gael)
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Question 112: To ask the Minister for Finance if he will report on the latest data on credit availability, declined cases, and the delivery on commitments by institutions covered by guarantee and by recapitalisation; and the lessons to be learnt from this experience for drafting regulations under the National Asset Management Agency Bill 2009. [39144/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Central Bank last week issued the latest Irish results of the Bank Lending Survey, which showed that for Q3 2009, credit standards on loans to enterprises tightened and the demand for loans from enterprises decreased further. However, it must be noted that the pace of tightening decelerated from the previous quarter and that credit standards on loans to enterprises are expected to remain unchanged during the fourth quarter of 2009. The survey acknowledged that previous Government announcements regarding recapitalisation support and state guarantees have facilitated access to wholesale funding markets although access to these markets remained challenging during the third quarter of 2009.

A comprehensive independent review of SME lending from both the demand and supply perspective was undertaken and was published in July. The review showed that demand had fallen sharply, with the value of new applications for credit down by 42% while refusal rates varied by size of company from 19% to 30%. Stock of credit remained static, indicating that new credits broadly matched repayments.

A follow-on Review covering the period to end September 2009 is currently underway and is expected in the coming weeks.

In the context of the recapitalisation, Allied Irish Bank and Bank of Ireland made explicit commitments 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. The measures taken to date by the recapitalised banks, including those relating to lending, are outlined in the supplementary booklet on NAMA and I would direct the Deputy to Section 4 of that booklet. The Financial Regulator has been monitoring implementation of this commitment.

With regard to drafting regulations under the NAMA Bill 2009, I will be introducing a Report Stage amendment to the Bill to provide a power to issue guidelines to the participating institutions on lending practices and procedures to improve the flow of credit to SMEs and, if necessary, other sectors. The power will be a wide ranging one and will allow for a response adapted to the particular circumstances of different institutions and sectors. This approach recognises that this is a complex situation and allows for a flexible response to changing credit needs.