Wednesday 13 December 2017

Banks' refusal to lend hindering country's recovery, says ISME

Mark Fielding, CEO of ISME. Photo: Tom Burke
Mark Fielding, CEO of ISME. Photo: Tom Burke

Maeve Dineen

Banks are continuing to hinder the country's recovery with the loan refusals rate now at 54pc, according to small business group ISME's latest quarterly bank watch survey.

The survey shows that while demand for bank credit is steady at 37pc, the refusal rate has risen to 54pc, after slight improvements in the previous two quarters.

"It may suit the administration to believe the fiction created by bankers' spin that the system is functioning, and it suits the bankers to maintain this fiction, otherwise why sink billions of taxpayers' money into keeping them afloat," said ISME chief executive Mark Fielding.

"The reality is that banks are performing at a very limited capacity in ensuring the payments system and ATMs are functioning.

"However, when it comes to assisting the SME sector to grow, the bailed-out banks are continuing to make it difficult for SMEs to access finance, thereby hindering the economy."

A spokesman for the Irish Banking Federation questioned the results of the survey, saying the demand for credit has been more "subdued" over the last number of months.

"The lending environment remains challenging but many of the issues revolve around demand, rather then the supply of credit," the spokesman said.

"Where there is demand, the banks must then decide on the viability of the business. It is all about viability."

However, Mr Fielding said it was not good enough for politicians or their civil servants to say that they will not intervene.

"The bailed-out banks are not fixed, rescued bankers continue to utter untruths, banking reform is delayed and banking policy is turning good business bad," Mr Fielding said.

"The Government, the owners, must take a more hands-on approach, while the system is broken, insist on opening credit lines, servicing SME customers and play their part in economic recovery."

The survey, conducted last week, attracted 706 responses, a response rate of 19pc. It included different sectors within SMEs, excluding agriculture.

The survey also showed that 37pc of respondents had requested additional or new bank facilities in the past three months, an increase from 31pc in the same quarter of 2011.

Around 80pc of businesses that applied for funding outlined that the banks are making it more difficult for them to access finance. Of the 46pc approved for funding, 65pc have drawn down the finance either fully or in part. Almost 100pc of those questioned said the Government was having either a negative or no impact on SME lending.

Rising bank charges are also proving problematic for the hard-pressed SME sector with 46pc of those surveyed saying they had experienced an increase in charges and 33pc an increase in their interest rate.

Mr Fielding said the "lucky few" who manage to secure finance and even those who have not needed finance in this quarter are being "screwed" by increases in bank interest and charges.

Irish Independent

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