Dara Calleary (Mayo, Fianna Fail)
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205. To ask the Minister for Finance his views on the impact of increased bank charges on business activity and employment levels; and if he will make a statement on the matter. [24434/13]

Dara Calleary (Mayo, Fianna Fail)
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206. To ask the Minister for Finance his views on whether business activity and maintenance of employment is being hampered by the failure of banks to reduce variable loan rates in line with the recent ECB rate reduction; and if he will make a statement on the matter. [24429/13]

Peadar Tóibín (Meath West, Sinn Fein)
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213. To ask the Minister for Finance the steps taken to ensure that banking lending rates to the small and medium enterprises sector reflect international borrowing rates and that bank charges reflect the need to support SMEs. [24453/13]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 205, 206 and 213 together.

The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. It is also very conscious of the costs faced by SMEs in doing business and one of the aims of the Action Plan for Jobs 2013 is to reduce controllable costs of doing business. I have no statutory function in relation to business interest rate and decisions made and charges imposed by individual lending institutions at any particular time. The decisions financial institutions operating in Ireland make on the interest rates and other fees they charge to customers are commercial decisions for the institutions concerned. Interest rates are determined by a broad range of factors including ECB base rates, deposit rates, market funding costs, the competitive environment, and an institution’s overall funding.

Given concerns over breakdown in monetary transmission and in particular increasing fragmentation within the Single European Market as highlighted by the high interest rates for SME lending in the periphery the ECB is currently considering a number of options that could reduce costs of funding in the periphery. In particular a technical group made up of the EU EIB and ECB is currently exploring the possibility of developing a market for SME-backed ABS as a way to enhance actual credit flows to SMEs.