Irish Credit Review Office: Bank of
Ireland and Allied Irish Bank have each agreed to advance annual credit of €3bn to viable SMEs over next 2 years. The head of the Credit Review Office said the banks advised
that where change has occurred, it has been in the tightening of adherence to
compliance with lending policy criteria in the sanctioning process. He saw no
evidence that credit overall was restricted.
The Minister for Finance and the
Minister for Enterprise, Trade and Innovation today published the first
quarterly report of John Trethowan, the Credit Reviewer, and summary Lending
Plans for Bank of Ireland and Allied Irish Bank. These Plans are summaries of
the more detailed commercially sensitive Plans submitted to the Minister for
Finance as required under the NAMA legislation.
Both Ministers said unless our banks
lend to viable businesses, our economic recovery will be stunted. “The
overriding objective of Government is to ensure that the economic recovery that
is now underway sustains existing jobs and creates new jobs. To achieve that
objective, it is vital that credit is provided to Small and Medium Sized
Enterprises which will be the key drivers of job growth,” said
Lenihan. He welcomed the lending plans of Bank of Ireland and Allied Irish Bank
which outline how they will achieve the target of €3bn lending each over each of
the next two years. “These plans have been reviewed by John Trethowan and
both his Office and my Department will receive monthly progress reports from the
two banks which will allow us to ensure they deliver 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.”
The Minister for Enterprise, Trade
and Innovation, Batt O'Keeffe TD, said: “The submission of the banks'
tailored lending plans, together with the new internal appeals mechanism and
credit review office, are significant steps the Government has insisted on
taking on behalf of small businesses-owners who rightly demand a credit return
on the investment they have made in our banking institutions.
I look forward to working closely
with the credit reviewer and with the Minister for Finance in sustaining
pressure on the banks to lend to viable small businesses so that jobs can be
protected and created and our economic recovery secured.”
The Ministers also welcomed the
inclusion in the lending plans a range of measures help foster business demand
and to improve the service banks provide to their smaller business customers.
Credit Review Office
The Minister said that Trethowan’s
findings in his first quarterly report would enlighten the debate about the
availability of credit to business. He noted that Trethowan had found no
evidence of constraints in the supply of credit to any sector of the SME / Farm
markets in his review of the banks’ policies and guidelines. Trethowan also
found evidence of a lack of experience among some front line bank staff in
dealing with SMEs and helping them with loan applications.
Quarterly Report from John Trethowan, Credit Reviewer - lending to SMEs
Allied Irish Banks SME Lending Plan
Bank of Ireland SME lending Plan
“I am particularly pleased that
the establishment of the Credit Review Office has led to a significant
improvement in the banks’ own internal appeal mechanisms, which resulted in 20%
of cases being successful although the numbers involved are still small. I would
urge SMEs who are refused credit to invoke the internal appeals procedures
followed if necessary by the Credit Review Office.”
The Minister set out the work of the
Credit Review Office to date:
The Office operates
a web site which received hits from over 2000 different users. The
helpline has received almost 200 calls to date.
Trethowan has completed six
reviews. He agreed with the bank in three of them, sided with the borrower
in two cases and considered that more work was required by both the borrower
and the bank in the other case. A further five applications are proceeding
through the process.
Trethowan also worked with the
two banks on placing their internal appeal mechanisms on a more formal
basis. Of a total of 49 internal appeals completed between the two banks, 10
resulted in the refusal being overturned or sanctioned with conditions.
Although only a small number of
reviews have been completed, the Minister said he was satisfied with the
positive impact of the Credit Review Office which has given an independent right
of appeal to businesses seeking credit and has resulted in the reversal of some
The low level of reviews to date may
reflect a lack of awareness of the Credit Review Office but the Office has
publicised its services through the media and in presentations to representative
organisations. The two banks are required to make borrowers who are refused
credit aware of the existence of the Credit Review Office and have been provided
with leaflets on the Office for distribution to borrowers.