Pearse Doherty (Donegal South West, Sinn Fein)
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59. To ask the Minister for Finance if he has carried out an impact assessment of the strategic banking corporation on the cost of business lending; and if he will make a statement on the matter. [35618/15]

Michael Noonan (Limerick City, Fine Gael)
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The Strategic Banking Corporation of Ireland (SBCI) was incorporated in September 2014 and its goal is to ensure access to flexible and lower cost funding for Irish SMEs.  The SBCI launched its first product programme on the 19th February 2015, and lending to SMEs commenced on the 9th March 2015 through both Bank of Ireland and Allied Irish Bank Plc.  An initial sum of €400m has been allocated between Bank of Ireland and Allied Irish Banks Plc. for lending to SMEs. 

The Government's aim for the SBCI is to enhance the range and profile of SME finance providers in Ireland, and thereby increase competition for SME lending.  The SBCI will achieve this by working with existing and new providers to develop specific funding products and by supporting new entrants to the SME lending market through allocating the remaining €400m to a number of new and non-traditional SME finance providers.  It is also an objective of the SBCI to encourage competition within the SME funding market through the provision of funding to a broad range of potential lending partners. 

Up to 30 June 2015, the SBCI had provided almost €45 million worth of discounted interest rate loans to 1,626 Irish SMEs.  The SBCI's on lending partners commit under the terms of their facility agreements to pass on the financial advantage arising from the discounted funding provided by the SBCI to their SME clients.  This is done either by way of a simple discount to the interest rate on each loan, the level of which is determined on a regular basis as funding is drawn down.  This serves as a minimum discount.  Alternatively, the financial advantage is delivered on a portfolio basis through a single price for SBCI loans, which delivers a varying discount but delivers the largest discount to the smallest borrowers.  The SBCI operates detailed monitoring processes to ensure that the full financial advantage is passed on to SMEs.  The SBCI places no maximum on the discount to be passed on and On-Lending institutions are free to discount further to them.

As the SBCI is operational for less than 7 months, and significant plans for further lending activities are in place, a formal assessment of the impact of SBCI on the cost of business lending has not been completed to date.