Gerry Adams (Louth, Sinn Fein)
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To ask the Minister for Finance if, further to Bank of Ireland Chief Executive Richie Boucher’s appearance at the Oireachtas Committee on Finance, Public Expenditure and Reform on the 1 of November 2012 that €3.5 billion comprises new and increased lending to customers, he will seek a breakdown from the bank of what percentage of that €3.5 billion is new lending and what percentage is increased lending; if he will confirm if that €3.5 billion includes the giving of a new facility as new lending; and if he will make a statement on the matter. [53220/12]

Michael Noonan (Limerick City, Fine Gael)
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The Government has imposed SME lending targets on Bank of Ireland and AIB for the three calendar years, 2011 to 2013. Both banks were required to sanction lending of at least €3 billion in 2011, €3.5 billion this year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks achieved their 2011 targets. The Head of the Credit Review Office (CRO), Mr John Trethowan, stated in his recently published ninth quarterly report that "€3.5bn of sanctions for each bank is a very challenging target, however the remaining five months typically show more lending activity and I am of the view that, after a slow start to the year, the targets will be a challenge but still may be achieved." As the Deputy may be aware, one of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme. The Economic Management Council meets the banks on a regular basis and discusses the key issues pertaining to this priority.

The banks have not been requested to report to my Department on the specific breakdown between new and increased lending. The important thing from a policy perspective is whether the additional credit is available to the SME customer, not whether they are a new or existing customer. I should say that this information would be commercially sensitive and I would not be able to release it to the Deputy even if it was to hand.

Mr Trethowan in his ninth report provided information on what is included in the figures reported to the CRO and my Department. This report is available at .

He says that Loan Sanctions i.e. total amount made available includes

“(i) Loans sanctioned but not yet drawn or utilised e.g. overdrafts are typically only @40% utilized, (ii) contingent liabilities? to support trade, such as letters of credit for exporters and performance bonds for certain contracts. These only become drawn balances if the transaction defaults, (iii) restructuring activities without which many more businesses would have failed”. Therefore a new facility would be included as new lending.

It is vital that the banks continue to make credit available to support economic recovery and I would advise any SME who is refused credit to seek an internal review and go to the Credit Review Office if necessary. 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.