Govt’s Economic Management Council has not met banks since February
The government needs to urgently heed the warning from the head of the Credit Review Office, John Trethowan, that the two pillar banks may not achieve the lending targets for 2012 set for them by government and should call the banks to an urgent meeting of the Economic Management Council, according to Fianna Fáil Finance spokesperson Michael McGrath.
Deputy McGrath stated, “We have stated for some time that the banks’ lending performance is not being correctly measured in the first place. The banks should be assessed based on the amount of new lending actually injected into the economy, rather than by lending approvals. Assessing the banks based on the amount of new lending approved is open to distortion and is letting the banks off the hook. Credit approvals often come with such onerous strings attached that the customer will never draw down the money.
“The statement by Mr. Trethowan today that AIB and Bank of Ireland may miss the SME lending targets the government set for them in 2012 should set the alarm bells ringing in government buildings. The reality on the ground is that viable businesses are still struggling to get access to credit with reasonable terms and conditions, and this credit squeeze is continuing to choke the economic recovery.
“The government needs to call in the banks and demand answers to the continuing failure of the banks to meet their responsibilities to the economy. Mr. Trethowan’s comments that the banks could take on some more risk provide further evidence of the inadequate performance by the banks.
“Given the lack of credit for SMEs in our economy, it defies logic that the Government’s Economic Management Council has not met the banks since last February. The banks need to be summoned to an urgent meeting of the Council to discuss the issue of credit and the banks’ handling of the escalating mortgage arrears crisis.”