Michael McGrath (Cork South Central, Fianna Fail)
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30. To ask the Minister for Finance if he will be able to assist small and medium-sized enterprise customers of banks who are engaged in a sale of their Irish loan books to re-finance their debts with a domestic lender; and if he will make a statement on the matter. [41751/14]

Michael Noonan (Limerick City, Fine Gael)
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I am aware of the prevailing situation in the Irish banking sector whereby a number of exiting banks are seeking to sell their Irish SME loan books  and the consequent need for their customers to refinance with the remaining domestic lenders.

In the case of a direct sale of the loan book, the relevant code of conduct that can apply to certain business borrower lender relationships is the Code of Conduct for Business Lending to Small and Medium Enterprises (SME Code). The application of the SME Code varies depending on whether the relevant purchasing entity of the commercial loans is a regulated entity or an unregulated entity. If the purchasing entity is a regulated entity, it is required to comply with the SME Code. The Government now proposes to protect all consumers and SMEs whose loans are sold to an unregulated entity by ensuring that owners of credit are regulated and therefore comply with the applicable Central Bank Codes.

It is also important to note that the sale of these loans does not change the terms and conditions of the loan agreement in any way. Irrespective of who acquires the loan(s) they will be required to honour the legal terms and conditions of the existing loan agreement(s).

Where the issue is refinancing loans by the SME from an exiting banks, the option of appeal to the CRO is available where the business is attempting to refinance with AIB or Bank of Ireland.  As the Deputy is aware, in Budget 2014, I announced an increase in the limit for loan applications that can be reviewed by the Credit Review Office (CRO) from €500,000 to €3m. This increase will facilitate requests from a broader range of SMEs, as well as assisting those borrowers currently banked with non-trading banks and banks which are strategically exiting the Irish SME lending market, whose refinancing requests are larger than €500,000.  In Budget 2015, I announced that the CRO remit is being further extended with Permanent TSB agreeing to participate in the CRO process and Ulster Bank considering a similar commitment.

The subject of refinancing is also being examined in context of the review of the Credit Guarantee Scheme by the Minister for Jobs, Enterprise and Innovation who has primary responsibility for the scheme.  The issue of utilising the Credit Guarantee Scheme to refinance SME loans from exiting banks is being considered.  I understand that this is currently at an advanced stage with deliberations between Department of Jobs, Enterprise and Innovation, Office of the Attorney General and Directorate-General for Competition at EU regarding State Aid issues.