Two-thirds of loan refusals overturned by watchdog
Published 08/10/2012 | 05:00
THE Credit Review Office upheld two-thirds of complaints against AIB and Bank of Ireland brought by small firms turned down for loans in the past three months, and the state agency thinks credit markets are getting worse, according to its latest quarterly report due out today.
The government office set up to police lending activities of the bailed-out banks said there are just three mainstream lenders dealing with small and medium sized enterprises (SMEs) and farms, and there is little chance of a competitor coming in.
The market is now made up of just AIB, Bank of Ireland and Ulster Bank -- plus a small number of more specialist asset finance houses, the report says.
The targets for AIB and Bank of Ireland's to advance €3.5bn of loans each to SMEs this year "is very challenging " but could be met, according to John Trethowan, head of the of the Credit Review Office. He said the flow of credit did pick up in the second quarter of the year, but will have to accelerate further if the targets are to be met.
The office dealt with 36 applications from companies turned down for loans by the two pillar banks over the past three months. Twenty-one of those cases have been decided to date, and in 14 the refusal was overturned.
This meant more than €1m of debt financing was released, supporting 106 jobs, according to the report.
AIB and Bank of Ireland each say that over 80pc of formal loan applications are being approved, but Mr Trethowan said he believes credit is becoming more difficult to access.
Addressing anecdotal evidence that many potential borrowers are being turned off from applying for loans informally, he urged all applicants to make a formal written application when seeking credit.
SME and farmers should not feel put off from applying for credit either through the "comments or actions of a few bank frontline staff," or negative commentaries in the media, Mr Trethowan said.