Tuesday 20 February 2018

Call for probe into bank lending to firms

Business chiefs today called on the Central Bank to investigate how high street banks are lending to firms.

The Irish Small & Medium Enterprises Association (Isme) said a survey of its members found more than half those who applied for finance in the last three months were refused.

Mark Fielding, chief executive of Isme, said the amount of credit being released was disastrous.

"The Isme Bank Watch survey results confirm that the banks don't give a hoot about the rest of the economy and are only concerned about saving their own hides," Mr Fielding said.

"It is now even more apparent that senior bankers see the Government as a 'soft touch' who will bail them out when required.

"This two fingered policy response by the bankers is causing untold damage to the rest of the economy, is hindering economic progress and is directly responsible for company closures and significant job losses."

The Isme survey said out of 834 businesses which replied to a questionnaire, 55pc had been denied credit by banks.

It added a quarter revealed that discussions over finance included questions over whether a family home could be used as collateral - half of these claimed bank staff instigated the conversation.

The survey also said 82pc of firms believe banks are making it more difficult for small and medium enterprises (SMEs) to access finance.

The Irish Banking Federation (IBF) reacted angrily to the survey and said it seriously questions its accuracy.

The representative body for the finance sector said the only authoritative, independent research on lending by the banks was conducted by professional services firm Mazars and published in April.

The report found eight out of 10 credit applications were approved.

Pat Farrell, chief executive of IBF, said: "Banks are committed to supporting viable businesses through these challenging times and the focus has to always be on the key issue of viability.

"At a time when the IBF, our member banks and the other SME business representative bodies continue to work with Government and all relevant stakeholders to provide the support that sustainable businesses need, it is particularly unhelpful that Isme produces misrepresentative information like this which does little or nothing to promote confidence."

The IBF also said a Credit Review Office was set up by the Government to adjudicate over loan applications turned down by the banks.

The finance body said it believed a report expected from the office in the next few months will not reflect the Isme survey.

Press Association

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