Business Irish

Saturday 21 April 2018

Ministers carpet AIB top brass on lending freeze

Showdown set for crucial meetings tomorrow

Get the bankers in: Brian Lenihan, left, and Batt O'Keeffe
Get the bankers in: Brian Lenihan, left, and Batt O'Keeffe

shane ross

Batt O'Keeffe and Brian Lenihan have summoned top bankers in AIB to meet them tomorrow morning to insist that they must lend more money to small businesses.

In an unprecedented move, the Ministers for Enterprise and for Finance have decided to challenge the AIB top brass head to head on their assertions that they are lending to liquidity-starved companies.

Both AIB chairman Dan O'Connor and managing director Colm Doherty are due to attend the meeting in the Department of Finance building in Dublin's Merrion Street.

Industry sources suggest that Ireland's biggest bank is in for a carpeting because of the crisis facing its customers. According to insiders, AIB has been singled out for attention because "it is not playing ball" over the needs of its customers and the economy.

Bank of Ireland is understood to have taken a far more relaxed approach to the needs of its clients.

Both ministers' conclusion on the intransigent attitude of AIB follows a nationwide series of meetings on credit with representatives of the Irish Small and Medium Enterprises (Isme), SFA, Chambers Ireland, the Irish Hotels Federation and the Irish Farmers Association. Eight meetings covered by Mr O'Keeffe and Mr Lenihan, with ministers of State Dara Calleary and Billy Kelleher attending two each, are being conducted over July and August.

The findings are already believed to have confirmed widespread anecdotal evidence that businesses are finding it increasingly difficult to secure credit from their banks, often because the conditions attached to the loans are impossible to meet.

Speaking to the Sunday Independent last night, Mr O'Keeffe was openly critical of the bankers' willingness to frustrate government policy.

"The overwhelming feedback from the eight regional meetings is that many small businesses continue to be stonewalled by our banks.

"Two things are clear," he insisted, "the Government must sustain relentless pressure on banks to lend to viable small businesses and we must boost public awareness of the new appeals mechanism available to borrowers".

Many of those sounded out by the ministers were critical of the new appeals mechanism, claiming that many of the credit review office team are former bankers and that bankers are therefore reviewing bankers' decisions. As a result, they suggest that the Government should put business people with track records on the review panels.

Representatives of the Chambers said that 80 per cent of their members did not even know of the existence of the review group.

Their words were echoed by Mark Fielding, the chief executive of ISME, who attended one of the ministerial meetings in Bundoran last Wednesday.

He said: "The message was coming out loud and clear from the meeting that despite their protestations, the banks are simply not lending money.

"The Government seems beholden to the banks. Small business is being held to ransom by big businesses, which are hoarding money, rather than paying their bills."

But Mr O'Keeffe countered by declaring: "If the banks do not lend, our recovery will be paralysed. We are determined not to allow that to happen."

Other complaints arising from the meetings include the need for the definition of a "viable" business to be examined and for greater transparency in tracking lending decisions to small businesses.

Sunday Independent

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