Government fails to impose SME lending targets on AIB and Bank of Ireland for 2014

Fianna Fáil Spokesperson on Finance Michael McGrath has described as short-sighted and a major mistake the failure of government to impose any SME lending targets on AIB and Bank of Ireland for 2014.

Deputy McGrath was reacting to a reply he received from Minister for Finance Michael Noonan to a parliamentary question he submitted in which the Minister confirmed that no SME lending targets have been set for 2014 for AIB and Bank of Ireland. The pillar banks were required to lend €4 billion each in 2013. 

Deputy McGrath stated, “While the lending targets regime that applied up to the end of 2013 was far from perfect, the targets at least meant the lending performance of the two pillar banks was being measured against set goals. The decision not to impose lending targets for 2014 comes at a time when the economy is showing tentative signs of recovery – a recovery which will depend on a proper flow of credit to small and medium sized businesses.

“The government may well believe that the banks are now working normally and meeting the lending needs of the economy, but the experience on the ground is quite different. Banks remain risk averse and lending conditions can at best be described as tight.

“I believe that clearly defined, measurable SME lending targets which can be independently verified are needed now more than ever in the Irish economy. The removal of the lending targets comes at a time when the promised credit for SMEs from German bank KfW has yet to materialise. The €100m of credit from KfW that is being speculated about is little more than a drop in the ocean and is no substitute for proper lending targets for the main Irish banks.”

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