STATUTORY POWERS:THE MINISTER for Finance has warned he will use statutory powers to ensure banks could not continue to refuse credit to customers who had made a successful appeal to the Credit Review Office.
Mr Lenihan was speaking at a news conference on the publication of the first quarterly report of John Trethowan, head of the Credit Review Office, and of the plans by Bank of Ireland and Allied Irish Banks to lend €12 billion to small and medium-sized business over the next two years.
Mr Lenihan said the plans had been reviewed by Mr Trethowan and there would be monthly progress reports from the two banks to ensure they delivered on “the strong commitments given in their plans to support viable businesses in all sectors of the economy and in every area of the country”.
He said: “I have statutory powers to compel the Nama banks to lend under Section 210 of the National Asset Management Agency Act 2009.”
Challenged about a report from the Irish Small and Medium Enterprises Association (Isme) that 55 per cent of companies that had applied for credit in the previous three months had been refused, Mr Lenihan said: “I’d like to see the Isme research on this. I’d be more than open to receiving the research from Isme and having it analysed.
“It’s important, I think, that everyone understands there is a credit review process available. There’s been a very small take-up at this stage.”
He added: “The banks are not the sole arbiters. That’s the whole point. Under this system, there’s an appeal to the Credit Review Office in the case of the Nama banks.”
Asked if he was sending out a warning to the banks that he would use his statutory powers to compel them to lend, Mr Lenihan said: “Oh yes, absolutely, that’s why the powers were inserted.”
Mr Trethowan said: “There are times, especially when the lending is difficult, [that] there is a refusal to respond to borrowers. There are long periods of silence: the banks aren’t communicating enough with the customers who need to find an answer to the queries they’ve been raising to the banks.
“This is not just one bank but I think across the board. It’s not just AIB and Bank of Ireland but other banks are practising the same tactic as well.”
Some borrowers had asked banks for overdraft facilities of €20,000 or €30,000 and the bank had agreed, provided an equal amount was lodged on deposit: “I cannot understand the logic of anyone needing money and then being asked to deposit the same amount at the same time.”
Fine Gael enterprise spokesman Richard Bruton last night said the lending proposals were “based on the flawed premise that bank figures can actually be trusted”.
He said that banks were “clearly not in the business of lending to small and medium enterprises, because they are not willing to take the risk”. Mr Bruton said “a targeted loan guarantee scheme” was required instead.
Labour’s enterprise spokesman Willie Penrose TD said in a statement: “Every public representative in this country will know from their own experience of small and medium-sized enterprises having reasonable applications for credit turned down.”
He added: “The Government has committed vast sums of taxpayers’ money to the banks. The very least that should be expected from the banks is that they should again turn on the credit supply that is the lifeblood of the economy.”
Sinn Féin finance spokesman Arthur Morgan TD said the Government was “adept at announcing schemes and plans, but their record on seeing these through to fruition leaves much to be desired”.
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