Micheál Martin (Cork South Central, Fianna Fail)
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To ask the Minister for Finance if he has received a copy of the study from the Central Bank of Ireland on lending and access to credit to small and medium businesses across the EU which concludes that Irish small and medium enterprises have the highest rejection rate from banks; the actions he will take following the reports findings; and if he will make a statement on the matter. [39023/12]

Michael Noonan (Limerick City, Fine Gael)
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I presume the Deputy is referring to Volume 2012, No.8 of the Economic Letter Series published by the Central Bank on 22 August last, entitled “Irish SME credit supply and demand: comparisons across surveys and countries.” I welcome all analysis in this key area which is used to inform all stakeholders. However, the Deputy should note that the Economic Letter contains a footnote stating that the views expressed in this paper are those of the authors and do not necessarily reflect those of the Central Bank of Ireland or the ESCB. The figures published in the report are based upon previously published data and I should point out that they show that Ireland has the second highest rejection rate rather than the highest as stated by the Deputy. While this rejection rate is obviously a concern, I feel that it is important not to always focus on the worst aspect of such reports. Business confidence is crucial in the restoration of the credit market and the continued negative narrative is unhelpful. The report also found that there was a slight improvement in the rejection rates compared with the previous survey.

The findings of the Mazars survey commissioned by my Department and other independent surveys, such as the SAFE survey, are used by the Department of Finance and the Credit Review Office to inform discussions with banks on this key area of the Irish economy and that the pillar banks, in particular adhere to their lending commitments under the recapitalisation agreements. Robust discussions have taken place between the Department, the Credit Review Office and the banks to ensure that the banks are lending into the real economy. In addition, the Government, through the EMC, continue to meet with the banks on a regular basis to underscore the requirement to have credit available to viable SMEs to facilitate and support the recovery of the economy.

In terms of rejection rates from banks in general, I would remind the Deputy that the Credit Review Office (CRO) can review decisions by the pillar banks to refuse, reduce or withdraw credit facilities (including applications for restructured credit facilities) from €1,000 up to €500,000. The Credit Review Office is overturning 55% of the refusals decisions referred to them and I would appeal to SMEs and farmers who have been refused credit by the banks to avail of the services of the CRO.

The latest initiatives by my colleague the Minister for Jobs, Enterprise and Innovation in relation to the credit guarantee scheme and the microfinance loan fund should also assist the flow of credit to SMEs.

In summary, it is vital 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 finance to be provided unless the business is viable and has the capacity to meet the interest payments and repay the sum borrowed. I remain open to any constructive suggestions which could augment the Government’s initiatives in this area.