Banks 'lagging in lending' warning

IRELAND'S banks are lagging behind their international counterparts when it comes to lending to businesses, Enterprise Ireland has warned.

The business group has pointed to a lack of experience in some institutions and said it feared some firms were not getting the best possible service.

And the State agency strongly criticised some of the main Irish banks which it said were "not fit for purpose" to deal with changing business demands during the downturn.

"The Irish banking system was not fit for purpose for lending to the SME exporting sector," according to Enterprise Ireland's Niall O'Donnellan.

"There were three main aspects to that. They did not understand the modern technology sector, were not comfortable lending to companies doing business in markets beyond the UK, and there were certain products that would help business but the banks would have been unfamiliar with, such as invoice discounting and so on," he added.

Addressing an Oireachtas committee, Enterprise Ireland's Frank Ryan said it is vital businesses receive "smart money" when they decide to take out a loan.

"We are agnostic in terms of where our client companies are getting credit from," he said.

"We would like to see them use Irish banks because we are Irish, but we want to see our firms get the best service possible," he added.