Monday 22 July 2019

Banks charging Irish SMEs double the interest rivals pay

Central Bank Deputy Governor Ed Sibley highlighted surge
Central Bank Deputy Governor Ed Sibley highlighted surge
Donal O'Donovan

Donal O'Donovan

Irish small and medium enterprises are half as likely to seek loans and overdrafts than in comparable markets. When loans are sought, Irish firms are twice as likely to be rejected.

That's according to a Central Bank report on credit conditions for SMEs in Ireland.

It shows the big three banks - Bank of Ireland, AIB and Ulster Bank - continue to dominate the sector. The market share of the top three lenders was 86pc of new lending in the first half of the year.

It also shows Irish firms paying twice as much to borrow as rivals elsewhere in Europe. The interest rate for non-financial corporation (NFC) loans of less than €250,000 averaged 5.2pc here in March, while the comparable interest rates elsewhere in Europe were 2.6pc.

The growing pot - €994m a year in 2017 - of non-bank SME bank financing, is limited to a small number of firms operating in high-technology sectors, the Central Bank said.

Meanwhile, the Central Bank is processing a surge in applications from financial services firms seeking an Irish licence ahead of the UK's planned EU exit next year, its Deputy Governor said yesterday.

"As a result of Brexit, we are dealing with an unprecedented volume of applications for licences to operate in Ireland, which are being processed over a relatively short period of time," Deputy Governor Ed Sibley said in a statement.

The Central Bank processed four applications in the first half of the year from large investment firms, compared to none in the same period last year. There were no applications for regulation from credit institutions, such as banks.

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