Terence Flanagan (Dublin North East, Fine Gael)
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Question 81: To ask the Minister for Finance when the partial loan guarantee scheme will be up and running; when he will be setting up a bank dedicated to helping the small and medium enterprise sector; and if he will make a statement on the matter. [16204/11]

Michael Noonan (Limerick City, Fine Gael)
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As part of the Jobs Initiative announced in this House on 10th May, both the Minister for Jobs, Enterprise and Innovation and I confirmed the Government commitment to initiating a tendering process for the development of a temporary partial credit guarantee scheme. A call for competition for the design of a scheme was published on e-tenders on 15th June on behalf of the Minister for Jobs, Enterprise and Innovation. The design of the scheme will draw from international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will be limited in its scope and will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be designed to encourage banks to lend to these new or expanding commercially viable SMEs so that they can grow their company, develop new products or expand into new markets.

The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that allow for review and revision of the scheme at the end of that initial period before committing to a roll-over of the scheme for subsequent years.

It is intended that the scheme will be in place in the autumn. Ensuring that a strategic investment bank is operating in the domestic banking market, providing finance to large capital projects and acting as a conduit for venture capital as well as a lender to SMEs, is an objective in the Programme for Government. As the Deputy will be aware a comprehensive programme of bank recapitalisation and restructuring is currently underway following my statement on the future banking landscape in Ireland at the end of March last. The essential detailed assessment and planning work to meet this objective will be accelerated once the Government's key immediate objectives for the repair of the banking system have been completed.

In the interim, it is important to make the point that important steps have already been taken to ensure that there is sufficient credit availability to meet the needs of the SME sector. These include the capacity being available under the pillar banks' deleveraging and restructuring plans to provide new lending which is estimated to be more than sufficient to meet the needs of the economy including the SME sector.