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Lending to small firms down 10pc in 12 months

The credit squeeze is continuing for small and medium-sized businesses while companies and pension and investment funds are continuing to withdraw money from the Irish banks.

This is according to new figures from the Central Bank that show bank lending to SMEs was down by 10pc over 12 months to the end of June, and declined by €891m alone in the last three months of that period.

The bank says the total amount of credit made available to SMEs for this period was €424m with these loans granted to businesses that were not involved in property or financial services.

Property-related businesses saw credit fall by 2.2pc with lending to companies in this sector down 10pc over the year although loans totalling €573m were granted.

Meanwhile the Central Bank notes a further outflow of deposits by Irish based companies from domestic financial institutions.

Between April and June these deposits fell by €2.4bn. This followed a fall of €3.6bn in the previous three months bringing the annual fall in these types of deposits to 17pc or €15bn.

The figure relates to Irish companies that have been moving their cash out of the Irish banks as well as pension and investment funds and brokers that have also been switching deposits this year.

Irish Independent