Ministers to meet banks on SME lending

The Government is to meet senior management of the major banks today as part of a “get tough” strategy to encourage them to release more credit to small and medium-sized enterprises (SMEs).

Minister for Finance Brian Lenihan and Minister for Enterprise Batt O'Keeffe are expected to meet executives from Bank of Ireland, AIB and Anglo Irish Bank. The Ministers will be accompanied by the credit reviewer John Trethowan.

Mr O'Keeffe previously confirmed to The Irish Times that he is deeply unhappy with the lack of effort being made by one of the major banks in providing credit to SMEs. He would not be drawn on the identity of the bank but it is believed to be AIB.

"One bank is making a particular effort but another bank – which has a plan for lending – does not appear to be making any effort, good, bad or indifferent.

"They are using all sorts of mechanisms to frustrate people who are looking for funding."

Mr O'Keeffe brought a series of reports he commissioned on the levels of credit being extended to SMEs. He said the banks were maintaining that their approval rate for lending was 80 per cent while businesses were reporting 20 per cent. Mr O'Keeffe said that having toured the State with a Government enterprise roadshow, he tended to believe the banks were not lending.

The Minister said he would use the reports, as well as the recent report of Mr Trethowan, as the basis for his argument in telling banks they must do better.

He said he was keen that all loan applications were received in writing by the banks rather than orally, so that a full picture could emerge.