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Bank staff need re-skilling to deal with SME loans

THE banks need to improve their levels of staff training when it comes to lending to small business but there is no evidence that they have reduced credit standards in order to meet lending targets, a Central Bank report has found.

In its review of the SME strategic lending plans of banks in the Republic, the Central Bank found that while risk management standards had been kept strong, the banks needed to "re-skill their people with appropriate credit skills for the level of responsibility they hold and the banks should consider establishing appropriate benchmarks for their credit people and frontline lenders".

A lack of expertise among frontline staff dealing with SME credit applications has been repeatedly highlighted since the downturn began.

The review, which covered AIB, Bank of Ireland, Ulster Bank, KBC, ACC and Danske Bank operating as National Irish Bank, also called for more engagement in SME lending at board level.

"Boards should be actively engaged and challenging earlier in the strategic planning process and at a more detailed level, thereby ensuring that the direction of the SME plans is aligned with the overall strategic vision and risk appetite for the banks," it said.

The Irish Banking Federation welcomed the report, saying it confirmed "the many positive developments and improvements that are evident in the bank/SME relationship".

"We would continue to encourage all SMEs requiring credit to apply to their bank and to provide the relevant supporting documentation required to make an informed decision," said IBF chief Pat Farrell.

The Small Firms Association said that while the review showed progress in banks' attitudes to SMEs, it also highlighted shortcomings in staff skills when it came to dealing with small businesses.

"Many small firms are crying out for credit now and everything must be done to assist those firms," said SFA director Avine McNally.

Irish Independent