Fianna Fáil Spokesperson on Jobs and Enterprise Dara Calleary has said Tánaiste Joan Burton was “stating the blindingly obvious when she said today that there was need for a greater flow of money from the banks to small businesses to help to grow the economy, but unfortunately her Government has done very to bring this about.”
Deputy Calleary said “At every hands turn the Government have left the banks to do what they wish. They have given them more power, more money and got nothing in return in order to help small business, increase employment opportunities and help grow the domestic economy.
“I welcome the Tánaiste’s new found interest around the problem facing thousands of businesses across the country that are still being starved of credit but it’s her Government that has failed to act. The Government established the Strategic Banking Corporation which doesn’t have a banking licence and can’t lend money. Instead it will give money to the banks in the hope that they will then lend it on to SMEs. The trouble is we know from the manner in which banks have hoarded capital over the last five years that it is more likely that they will continue in the same vein.
“The result of this will be that many firms with viable business propositions will again be denied the capital they need to invest and grow. Cheap funding from the Strategic Banking Corporation may help the banks’ profitability but it will do little to improve credit flow in the economy.
“We are calling for a full state-backed Enterprise Bank. This was a commitment in the Programme for Government but has not been delivered. Why not? A new Enterprise Bank could be a permanent solution to the lending gap which exists in Irish banking and would lend to any company, regardless of sector or size, provided it can demonstrate its creditworthiness.
“SMEs are the lifeblood of the economy. They make up 70% of all employment in the private sector and their recovery is being strangled by lack of access to credit. We know banks are increasing fees and charges for businesses, that rising energy prices are having a huge impact and the Government is simply not doing enough to help this sector drive a real recovery in the economy.
“As well as the availability of credit a separate which does not get the attention that it deserves is the price of credit. The concentration of banking in the hands of a dwindling number of institutions has allowed them to raise interest rates, fees and charges. We have seen an exodus of overseas banks from the market. The government has failed to bring forward proposals which would address the lack of competition in the sector. We are now effectively back to a 1980s situation of a banking duopoly. This is having a serious detrimental effect on the interest of businesses throughout the country,” commented Deputy Calleary.