David Cullinane (Waterford, Sinn Fein)
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62. To ask the Minister for Finance if he has given consideration to regional specific targets for bank lending to small and medium enterprises; and if he will make a statement on the matter. [29649/16]

Michael Noonan (Limerick City, Fine Gael)
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Small and medium sized businesses play a central role in the sustainable recovery of the Irish economy.  Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.  As the Deputy will be aware, Chapter 7 (Finance for Growth) of this year's Action Plan for Jobs (APJ) sets out a range of commitments to ensure viable SME's can access appropriate finance at a reasonable cost from both bank and non-bank sources.  These Government policies have supported a year on year increase in new lending.   

The Deputy may be aware that as part of the 2011 recapitalisation exercise, the previous Government imposed SME lending targets on AIB and Bank of Ireland for the three calendar years, 2011 to 2013. Each bank was required to sanction lending of at least €3 billion in 2011, €3.5 billion last year and €4 billion in 2013 for new or increased credit facilities to SMEs. Both banks have achieved these targets.  Although the targets were a useful policy intervention, the focus needed to shift towards the collation and examination of granular data.  Therefore, in line with Action 144 of the APJ, officials from my Department collate and examine on a monthly basis, granular data including regional data, on the funding of the activities of SMEs from both AIB and Bank of Ireland, the wider banking sector and increasingly the non-bank funding sector.   

In addition, AIB and Bank of Ireland meet my officials, and those of the Credit Review Office, on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment and to keep them abreast of issues pertaining to the SME sector.  This facilitates the Department and the Credit Review Office in ensuring that new lending to SMEs continues to increase as a percentage of total sanctioned lending and assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.  

The Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro, sectoral and regional basis in order to ensure that there is sufficient access to finance for SMEs. 

It should be noted that the imposition of regional commercial bank lending targets could lead to target driven credit decisions that could pose financial stability risks to our wider economy.  The Deputy will be aware that in my role as Minister for Finance I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to pricing, products and lending decisions as determined by the banks.