Niall Collins (Limerick County, Fianna Fail)
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315. To ask the Minister for Finance the approximate regulatory and administrative cost in addition to other potential costs of enabling the SBCI to lend directly to SMEs; and if he has explored the concept of relicensing the SBCI in order for it to develop branches for direct lending. [28399/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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The strategic mission of the Strategic Banking Corporation of Ireland (SBCI) is to deliver effective financial supports to Irish SMEs that address failures in the Irish credit market, while driving competition and innovation and ensuring the efficient use of available EU resources. The SBCI achieves this aim through the provision of low cost liquidity and risk sharing activities supporting the provision of appropriately priced, flexible funding to SMEs.

The SBCI does not lend directly, rather, it lends through partner financial institutions, known as on-lenders. The SBCI currently has 8 on-lenders, 3 bank and 5 non-bank finance providers. Details of the SBCI on-lending partners are available at . To the end of March 2017, the SBCI has lent out €657 million to nearly 15,300 SMEs supporting the employment of over 67,000 people. SMEs in all sectors of the Irish economy benefit from SBCI finance. The majority of SBCI loans are used for investment purposes and SMEs supported by the SBCI are based in all regions of the country, with 85% of them outside Dublin.

The SBCI expects to announce further on-lenders in 2017. It also intends to build further on the risk-sharing aspect of its business model, allowing it to target new sections of the SME finance market and improve the risk appetite of partner finance providers. The SBCI will do this through its operation and management of the Credit Guarantee Scheme and through the use of European financial instruments, building on the success of the Agricultural Cashflow Support Loan Scheme, which was supported by a €100 million COSME facility from the EIF. This scheme has provided the SBCI with the proof of concept for risk sharing and now provides the opportunity to bring additional guarantee-backed products into the Irish market.

There would be significant cost implications associated with the SBCI changing its on-lending model to direct lending as well as regulatory, competition and resourcing issues that would need to be addressed. A suitable distribution model would also be required. From a policy perspective, the SBCI is not intended to be a bank and its role as a National Promotional Institution is quite different from a bank and does not require direct lending. The SBCI takes a market neutral approach; its activities are largely driven by market demands and needs that are not fully met by the private sector with the aim of improving competition.  The SBCI is working to develop a more diverse range of on-lenders and innovative products to meet the evolving requirements of the SME finance market and contribute to a sustainable economy.