Peadar Tóibín (Meath West, Aontú)
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39. To ask the Minister for Finance the steps taken by his Department to ensure competition in the SME loan market; if his attention has been drawn to the impact the withdrawal of a bank (details supplied) will have on SME lending and financial services for rural communities; and if he will make a statement on the matter. [10646/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware one of the Government's key priorities is to ensure that viable SMEs continue to have access to credit from both bank and non-bank sources. However, the responsibility for competition policy rests with the Department of Enterprise, Trade and Employment and the Competition and Consumer Protection Commission (CCPC) which is an independent statutory body that is responsible for the enforcement of competition law in Ireland.

NatWest has outlined that an orderly phased withdrawal of Ulster Bank from the Irish market is to take place over a number of years. There is no immediate change for customers with full banking services to continue across all channels for existing and new customers. While NatWest has confirmed that it is negotiation with Permanent TSB and other strategic banking counterparties in relation to certain retail and SME assets, liabilities and operations, these negotiations are at an early stage.

Ulster Bank’s withdrawal from the Irish market must be undertaken in accordance with the provisions of Irish financial services legislation, including the Central Bank of Ireland’s codes of conduct. The Central Bank of Ireland has clear requirements that apply when firms cease operations or transfer operations to another entity. Customers must be informed about these decisions and given at least two months’ notice to move to alternative providers. If their loans are transferred, they must be given full details of the arrangements. Where a loan is sold or transferred to another regulated entity, the protections that were available to borrowers prior to the transaction continue to be in place with the new owner.

The Irish retail banking system is concentrated by international standards, with five retail banks accounting for the majority of new mortgage lending, and three retail banks accounting for the majority of new bank lending to SMEs. However, the wider context is one of improving competition in the provision of financial services, with new non-bank entities entering or expanding their operations in SME lending, including through loan guarantee schemes such as the Covid-19 Credit Guarantee Scheme.

As the Deputy may be aware, the Department of Finance published a paper in 2019 by Indecon Consulting on an Evaluation of the Concept of Community Banking in Ireland. This was a follow on to a previous paper on Local Public Banking published by the Department of Finance in 2018. The Indecon report concluded that there is no business case for the State to establish a public banking system in Ireland, supporting the outcome of the previous report on Local Public Banking. Indecon’s report also noted that there is extensive provision of and access to banking services through bank branches, credit union offices and An Post branches across the country, as well as a wide range of Exchequer funded existing supports.

It is also worth noting that the provision of financial services is evolving rapidly. These range from innovations in fintech to new initiatives from credit unions and the likes of An Post that are resulting in the provision of new services and products.