Éamon Ó Cuív (Galway West, Fianna Fail)
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189. To ask the Minister for Finance the discussions he has had with the Central Bank in relation to the renewal of the loan moratorium for businesses affected by the renewed lockdowns due to Covid-19, particularly in the hospitality industry, similar to that implemented in March 2020; the result of these discussions; if such a moratorium will be introduced; and if he will make a statement on the matter. [3707/21]

Éamon Ó Cuív (Galway West, Fianna Fail)
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190. To ask the Minister for Finance the discussions he has had with the financial institutions to ensure that credit arrangements agreed with commercial banks by businesses affected by the Covid-19 restrictions will not affect the credit rating of those businesses in the future; the result of these discussions; and if he will make a statement on the matter. [3708/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 189 and 190 together.

On 18 March last the Banking and Payments Federation of Ireland (BPFI) announced a coordinated approach by banks and other lenders to help their customers who were economically impacted by the Covid-19 crisis. The measures included flexible loan repayment arrangements where needed, including loan payment breaks initially for a period up to three months and then subsequently extended for up to six months. The implementation of this voluntary moratorium by the banking industry was a flexible response to the emerging Covid-19 crisis and ensured that a large volume of affected customers could benefit quickly during a fast moving and evolving public health crisis.

The Deputy may wish to note that borrowers whose payment break has ended are been given an option to return to full repayments based on the same term of the loan or to extend the term of the loan or to engage further with their bank on suitable arrangements. On 30 November last, the BPFI reported that approximately 49% of SMEs returned to repaying on the existing term whilst 46% returned to repaying on extended term basis and just over 5% returned on reduced repayments.

The Central Bank has confirmed that there is no regulatory impediment to lenders offering payment breaks to borrowers, providing they are appropriate for the individual borrower circumstance. The BPFI has also reiterated in recent days that standard payment breaks continue to be part of the wide range of tailored solutions which are being made available to customers upon assessment of their situation.

SME borrowers have regulatory protections via the Central Bank's SME lending regulations. The SME Regulations

set out the required treatment of SMEs by regulated entities in relation to various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security or collateral, credit refusals and withdrawals, handling complaints, managing arrears and having in place policies for engaging with SMEs in financial difficulty. The options could include additional flexibility, and this could be a short-term arrangement such as additional periods without payments or interest-only repayments, or if appropriate more long term arrangements.

In addition, Credit Review was established to assist those SMEs and farm borrowers that have had credit applications of up to €3 million refused or indeed an existing credit facility withdrawn or amended by the participating bank. SMEs can apply to Credit Review after exhausting the internal appeals process in the participating institution, which are currently AIB, BOI, Ulster Bank and Permanent TSB.

Through ongoing engagement with the BPFI and lenders, the Central Bank is working to ensure that borrowers affected by COVID-19 continue to be supported through this period of unprecedented stress. The Central Bank recently wrote to all lenders indicating that lenders are to ensure that they have sufficient expert resources to assess individual borrower circumstances, and to offer appropriate and sustainable solutions to affected borrowers in a timely manner in line with regulatory requirements. The Central Bank’s clear expectation is that lenders engage effectively and sympathetically with distressed borrowers.

It should be noted that the Central Credit Register does not produce credit scores; rather the information on a credit report provided by the Central Credit Register is factual in nature and the information is provided to the Central Credit Register by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers.Subject to complying with applicable law and regulatory requirements, it is a matter for lenders to make their own lending decisions in accordance with their own credit policies and risk appetites.

I will continue to work with the Central Bank, as regulator, to ensure that the Central Bank consumer protection and other applicable frameworks will be fully available to all borrowers that will still need support.