Peadar Tóibín (Meath West, Sinn Fein)
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Question 159: To ask the Minister for Finance his plans to change lending practices within banks towards giving credit to businesses on the basis of their health and potential rather than on the assets that they have. [14721/11]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that the banking system restructuring plan creates capacity for the two Pillar Banks, Bank of Ireland and AIB, 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 €16-20bn over this period. In each bank, a team of senior managers will be dedicated to the task of ensuring lending continues to grow to support economic growth. This lending capacity is incorporated into the banks' deleveraging plans which allow for repayment of Central Bank funding through asset run-off and disposals over the period to 2013.

Both pillar banks provide my Department with monthly figures on balance sheet volumes, sanctioned facilities and geographic and industrial breakdowns of their SME lending. The Deputy may also be aware that 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.

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. This is another means of ensuring that the money is lent to the productive sector. 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, Enterprise Ireland is working with both banks to develop staff who are well versed in the issues facing exporters especially in the emerging sectors and are capable of cashflow based lending.