Banks 'were not equipped to help firms as downturn took hold'
Enterprise Ireland warns that lenders still not up to scratch
THE main Irish banks were "not fit for purpose" to deal with the changing demands of Irish business when the downturn began and are still nowhere near up to speed, a leading business group warned yesterday.
Enterprise Ireland's Niall O'Donnellan, who is the main liaison between the agency and AIB, Bank of Ireland and Ulster Bank, told the Public Accounts Committee the lenders were not equipped to support small and medium-sized firms looking to sell their goods overseas.
"The Irish banking system was not fit for purpose for lending to the SME exporting sector," he said.
"There were three main aspects to that. They did not understand the modern technology sector, were not comfortable lending to companies doing business in markets beyond the UK, and there were certain products that would help business but the banks would have been unfamiliar with, such as invoice discounting and so on," he added.
Enterprise Ireland chief executive Frank Ryan pointed to a lack of experience in the banks and added that while progress had been made, the domestic banks still lagged some of their international rivals.
"We are agnostic in terms of where our client companies are getting credit from; we would like to see them use Irish banks because we are Irish, but we want to see our firms get the best service possible.
"A key part of that is to not just get money but to get 'smart money'. Some banks can give credit lines but they are also able to help a firm do business in a particular region. A contract in the United Arab Emirates is different to a contract in Saudi Arabia, for example.
"We are not bothered about where companies get finance; we want the best for them regardless," he added.
Enterprise Ireland executives were before the committee to discuss their 2011 accounts, and while the situation with the banks has improved – the agency meets the bank chief executives every six months while AIB joined an EI trade mission to China – there remained issues that needed to be resolved.
Away from access to credit, Mr Ryan said last year's visit by incoming Chinese leader Xi Jinping was a "game changer" for Irish companies doing business there.
"Before that event, to be frank, most Chinese people would have had no idea where Ireland was. That visit completely changed that, and its importance cannot be overstated," he said.
The agency spent an average of €12,024 for every job its client firms created between 2007 and 2011, nearly three times the €4,385 it spent between 2002 and 2006.
He also dismissed the idea that EI offices overseas could be combined with embassies and IDA offices even more than they already were.
"We always look to house our offices with the Department of Foreign Affairs or other state agencies.
"The only ones we have that are standalone are in places like Australia, where Sydney is the business capital but the embassy is in Canberra, and it would make no sense to have an office in Canberra."