Mary Upton (Dublin South Central, Labour)
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Question 20: To ask the Minister for Finance his views on the most recent monthly Private Sector Credit Statistics published by the Central Bank; his views on whether the decline in household and commercial debt is a function of weak demand for credit or weak supply of credit; and if he will make a statement on the matter. [25635/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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Private sector credit growth and debt levels are monitored by the Central Bank and Financial Services Authority of Ireland and details are published by the Bank in their monthly and quarterly bulletins. The most recent monthly statistics were published on 31 May 2010 with figures to the end of April 2010.

These showed the headline level of private sector credit outstanding to be €352.8 billion at the end of April 2010. This is a 12.7 per cent decline in the stock of private sector credit since the peak level of €403.9 billion in November 2008. The annual rate of change was minus 9.3 per cent, following a similar decline in March and minus 8.9 per cent in February. The decline reflects both valuation effects and repayments exceeding new lending.

Survey evidence from the main credit providers suggests both reduced demand for credit and continued tightening of credit standards by lenders for business lending during the first quarter of 2010. Credit standards on loans to households tightened for both lending for house purchase and consumer loans during the first quarter of 2010 and this was attributed to increased risk perception.

It is important from a policy perspective to ensure that viable businesses have access to credit. In this context, on 30 March I announced specific lending targets on the main business banks, AIB and Bank of Ireland. They will make available for targeted lending not less than €3 billion each for new or increased credit facilities to SMEs in both 2010 and 2011. The two banks have each submitted SME lending plans for 2010 and 2011 in light of the €3 billion target. These plans are being reviewed by my officials and Mr. John Trethowan, the Credit Reviewer.

Additionally, the Deputy will be aware that the Credit Review Office is available to review banks' decisions to refuse or withdraw credit to small and medium enterprises (SMEs). It will provide an independent opinion of the banks' decisions on whether the credit should have been granted or not. In addition to dealing with individual cases, the credit review system will examine the credit policies and practices of the banks in respect of SMEs. This will help me to decide what further action might be necessary to secure the flow of credit. I intend to publish the analysis from the review process so that the performance of the banks participating in NAMA will be clear to all.