System will see if SMEs getting the credit they deserve
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Thursday December 10 2009
FINANCE Minister Brian Lenihan yesterday gave concrete details of the Government's plans to ensure major banks lend to viable SMEs through the downturn.
Mr Lenihan's Budget speech revealed the creation of a "credit review system" that will monitor small business lending across the banks benefiting from the National Asset Management Agency (NAMA).
Under the stewardship of respected former top banker John Trethowan, the new system will be given powers to ensure that banks are lending to viable small-to-medium enterprises, potentially bringing an end to a long-running controversy over perceived credit shortages.
It will be established under NAMA legislation that gave the minister powers to issue SME lending guidelines to all banks participating in the 'bad bank', to make sure SMEs, sole traders and farms have recourse to an independent, external review of decisions of credit refusal.
Return
"In light of the massive state commitment to the banking sector, I am determined that there will be a return to the taxpayers of this country in the form of credit which supports healthy Irish businesses and jobs," Mr Lenihan said.
He added that he hoped banks that were not taking part in NAMA or the state guarantee scheme would also participate in the credit review system.
"My aim is to have a simple, effective appeals process, run by people with experience and credibility. The banks must comply with the recommendations of the appeal process, or explain satisfactorily why they cannot do so," he said.
The system will also examine the credit policies of banks lending to all SME sectors. "It will pay particular attention to sectors such as the retail sector, including car dealerships, tourism and agriculture, where particular stresses have been reported," he said. "This will help me decide what further action might be necessary to secure the flow of credit."
The minister plans to publish the analysis from the review process. The Irish Banking Federation welcomed the establishment of the review system "as constructive and helpful in building trust between the banking sector and SMEs".
- Joe Brennan and Laura Noonan
Irish Independent
