Bernard Durkan (Kildare North, Fine Gael)
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Question 120: To ask the Minister for Finance if banking staff, including middle to senior management, receive performance-related income arising from the manner in which they are expected to deal with account holders; if any particular trends have been identified amongst certain financial institutions; and if he will make a statement on the matter. [14427/11]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank of Ireland published the findings of its review of remuneration policies and practices in a number of Irish retail banks on its website on 1 December 2010. The review assessed whether banks have changed how they remunerate employees, particularly those in senior executive positions, to reflect incoming regulatory standards and the lessons of the financial crisis. In particular, it examined whether banks have ended remuneration practices which fostered inappropriate risk-taking or inadequate risk management. The review found that while the majority of banks have started to reform their remuneration policies and practices, the balance of the Central Bank's findings were discouraging. For example, there is little evidence that banks have self-consciously made a link between their risk appetite and their incentive structures, exposing the banks, and by extension the State, to the consequences of inappropriate risk-taking; the governance and oversight of remuneration practices is poor; and in the majority of banks, procedures to determine remuneration are not clear, well documented or internally transparent. There was little evidence of consideration of risk or collaboration with risk management functions to ensure remuneration policies are aligned with long-term strategic plans.

Issues identified in the review are being followed up individually with institutions by the Central Bank. Detailed EU requirements on remuneration policies in credit institutions have come into force in Irish law since 1 January 2011 through amendments made in the capital requirements directive. These obligations are supplemented by extensive guidelines issued by the Committee of European Banking Supervisors, which is now known as the European Banking Authority, compliance with which will be closely monitored by the Central Bank of Ireland in assessing adherence with each institution's legal responsibilities. Enforcement action can be taken by the Central Bank in case of non-compliance. These measures will address the significant issues disclosed in the Central Bank's review of remuneration policies and practices which were also highlighted as significant contributors to Ireland's banking crisis in the recent Nyberg report.

Following a request from my Department, the National Treasury Management Agency, which has legal responsibility for managing the State's shareholder relationship with the banks, has recently written to the covered institutions requesting that they undertake a review of remuneration practice, that they have further discussion with the Department of Finance ahead of any commitment to additional redundancy payments and that the bank does not commit to further termination payments until the review is completed. An analysis of severance entitlements has also being requested.

Finally, if the Deputy has any concerns relating to the manner in which bank staff deal with customers which he believes reflects the design of their remuneration arrangements, he should certainly bring this information to the attention of my Department.

Bernard Durkan (Kildare North, Fine Gael)
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Question 121: To ask the Minister for Finance if banks have attracted sufficient deposits to facilitate lending for productive purposes, thereby contributing to economic recovery; and if he will make a statement on the matter. [14428/11]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, restoring the funding position of the Irish banks to health is a major priority of the programme agreement concluded with the IMF and EU. Significant elements of the programme are intended to contribute to this objective. This includes the right-sizing of the Irish banking system through the implementation of the bank deleverage plans to ensure that in the future the banks can be adequately funded from the market – both from deposits and the international debt markets. In addition, a central element of the programme agreement requires the banks to achieve long-term sustainable loan-to-deposits ratios aligned with good practice international standards and consistent with the new regulatory standards for bank liquidity being put in place internationally. These initiatives will be implemented in a way that fully supports the lending required by the economy. The Government's Plan for the restructuring of the Irish banking system announced at the end of March last creates capacity for the pillar banks to lend in excess of €30bn. over the next three years. The Central Bank has estimated that SME and mortgage credit of up to €16.5bn will be required over that period. The bank system will, therefore, be equipped to facilitate the lending highlighted in the Deputy's question to underpin economic recovery.

Bernard Durkan (Kildare North, Fine Gael)
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Question 122: To ask the Minister for Finance the degree to which he has identified insufficiency of lending to business, including small and medium-sized enterprises; the steps he will take to address this issue as a matter of urgency; and if he will make a statement on the matter. [14429/11]

Michael Noonan (Limerick City, Fine Gael)
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Both AIB and Bank of Ireland provide my Department with monthly figures on balance sheet volumes, sanctioned facilities and geographic and sectoral breakdowns of their SME lending. In addition, under the terms of the government recapitalisation, both banks also produce a quarterly report which incorporates figures for sanctions and drawdowns by SMEs. The data contained in these reports will continue to be reviewed and analysed by my Department and the Credit Review Office to ensure that the banks are compliant with the terms of the Government recapitalisation as it relates to the provision of credit for SMEs. The Deputy may be aware that the restructuring plan creates capacity for the Pillar Banks to provide lending in excess of €30 billion in the next three years. SME and new mortgage lending for these banks is expected to be in the range of €16 billion to €20 billion over this period. In each bank, a team of senior managers will be dedicated to the sole task of ensuring lending continues to grow to support economic growth.

Bernard Durkan (Kildare North, Fine Gael)
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Question 123: To ask the Minister for Finance the total number of business enterprises in the manufacturing and service sectors whose applications for overdraft or working capital have been refused by the banks or transferred into a term loan; and if he will make a statement on the matter. [14430/11]

Bernard Durkan (Kildare North, Fine Gael)
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Question 125: To ask the Minister for Finance if any information has been made available to him regarding the number of instances in which financial institutions have refused to provide lending facilities for the business or job creation sectors; and if he will make a statement on the matter. [14432/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 123 and 125 together.

On 23 May last, the CSO published data in "Access to Finance" which showed that 74% of firms were successful or partially successful in applying for bank loans in the twelve-month period to September 2010. Clearly, it is important that the banks continue to make credit available to support economic recovery. However, it is not in the interest of the banks, businesses or the economy for banks to lend unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed.

As I have said before the Credit Review Office will, on application from the borrower, carry out an independent and impartial review of a bank's decision to refuse or reduce credit. I would strongly advise anyone who has unsuccessfully appealed through the bank's own internal appeals process to seek a review by the Credit Review Office. In addition, both Bank of Ireland and Allied Irish Bank provide information on an aggregate basis on loan approval rates as part of their monthly and quarterly reporting to my Department in relation to credit.