Sandra McLellan (Cork East, Sinn Fein)
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Question 108: To ask the Minister for Finance his views on the current rate of lending to small and medium business in the hospitality sector by Irish banks covered under the bank guarantee scheme; the efforts he has made to ensure adequate funding for viable businesses; and if he will make a statement on the matter. [18962/11]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy may be aware that under the terms of the government recapitalisation, both pillar banks produce a quarterly report which incorporates figures for balance sheet volumes, 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 most recent quarterly report by the Credit Reviewer which was published in May gave information on the balance sheet share of lending by both AIB and Bank of Ireland at end March 2011 and compared this with January 2010. The Hotel and Restaurant sector was 17% of the SME balance sheet in January 2010 and remained at the same 17% level in March 2011. Therefore I would conclude that the hospitality sector is not disproportionately affected in relation to credit.

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.

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. Last week, I raised the threshold for reviews from €250,000 to €500,000 to bring more credit refusals within the scope of 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.

Last week I published some of the suggestions sent in by members of the public in response to my Credit Suggestions Initiative on how to improve the number of Small and Medium Sized Enterprises (SMEs) applying for credit. The public has now been invited to comment on the published list with a view to improving and refining them and my officials will be working on the assessment of the suggestions at the same time.