The Irish Banking Federation (IBF) welcomes publication today of the Central Bank’s Review of SME Lending Strategies in confirming the many positive developments and improvements that are evident in the bank/SME relationship and identifying ways in which this important relationship could be further enhanced.
The IBF finds encouraging the Central Bank’s findings of significant improvements in the policies and practices employed by banks in support of their SME customers, including the following in particular that:
- banks are now focusing on improving their SME customer engagement and have made progress in developing quality SME plans
- banks’ SME marketing plans are of a good overall quality with evidence of regular communication with SME businesses
- the amount and standard of formal business credit skills training and staffing is improving in banks along with the recognition of the need for further progress
- banks are not reducing their lending standards in an effort to achieve particular lending targets
- banks are actively and positively engaging with the independent Credit Review Process on SME credit appeals; or, where outside that particular process, applying the principles of the CRO process.
IBF also notes that these improvements are taking place at the same time as considerable manpower and other resources have been required to be devoted to managing the bank restructuring process, engaging with a more extensive regulatory approach and managing larger numbers of underperforming SME and personal portfolios.
IBF firmly believes that the banks doing business with SMEs today are acutely aware of the challenges they face in refocusing their business model from the property-based lending of the past to cashflow-based lending – a point also acknowledged by the Central Bank. While they are actively addressing these challenges, IBF for its part has been working with Enterprise Ireland to help identify the appropriate banking support framework for our exporting SMEs.
Commenting on the Central Bank review, the IBF’s Chief Executive, Pat Farrell, stated: “Banks remain fully committed to supporting viable businesses and today’s Central Bank review is welcome confirmation of the range of ongoing work by banks in this regard and affirmation of the need to continue to build on this good work – such is the importance of the SME sector to our economy. Up to €14 billion in SME funding for new or increased credit facilities is being made available over the course of 2010-11 by banks here. These initiatives are complemented by a range of non-financial advisory and mentoring support services. It is notable that in the latest Central Bank Quarterly Bulletin, also published today, the recent decline in credit is presented as being not simply a supply side issue but also a demand side one. This is why we would continue to encourage all SMEs requiring credit to apply to their bank and to provide the relevant supporting documentation required by the lender to make an informed decision.”
Editors’ Note: The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644