Wednesday 16 August 2017

Brexit decision makes it harder to attract new business lenders to Ireland - SBCI boss

Chief Executive of SBCI, Nick Ashmore pictured alongside Taoiseach Enda Kenny,Joan Burton Joan Burton and Minister for Finance Michael Nooan. Photo: Mark Condren.
Chief Executive of SBCI, Nick Ashmore pictured alongside Taoiseach Enda Kenny,Joan Burton Joan Burton and Minister for Finance Michael Nooan. Photo: Mark Condren.

Britain’s vote to leave the European Union has made it harder to attract new business lenders into Ireland, according to the head of the Strategic Banking Corporation of Ireland (SBCI).

The State owned lender was set up during the financial crash to provide a flow of financing to small and medium enterprises (SMEs), at a time when the main banks were unwilling or unable to lend.

The SBCI doesn’t lend directly, but does provide finance to AIB, Bank of Ireland and Ulster Bank, as well as to four niche non-bank lenders at low cost, that must be loaned on to businesses.  

Financial results show SBCI has provided €347m to date to SMEs. Lending  is up from €172m at the start of the year, but well below SBCI’s total current lending capacity  of €850m.

 Encouraging new entrants into the Irish market is one of the SBCI’s main objectives. That remains challenging, especially in relation to traditional term lending, Mr Nick Ashmore said.

Term lending to SMEs remains dominated by the main banks however, but is a high risk area to get into for new entrants, he said.  

“I don’t think we’re seeing competition at the level we’d like to see, we’d like to get a new term lender in here,” he said.

UK banks which had been looking at expanding operations in Ireland are now “up to their necks in Brexit,”  and unlikely to launch new initiatives here, he said.

Non-banks lenders are more flexible, he said. 

In the meantime, SBCI said its midyear update showed good progress across key metrics:

•    Drawn lending has doubled to €347m, with the money gone to 8,619 Irish SMEs

•    The number of jobs supported by SBCI lending is 43,349

•    Average loan size is now €40,000, from €37,000 last December.

•    The largest loan was €5m.

 

 

 

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