‘Hands off KfW cask’, Higgins Tells AIB and Bank of Ireland.

‘Hands off KfW cask’, Higgins tells AIB and Bank of Ireland

16 March 2014

Statement by Senator Lorraine Higgins
Euro Candidate for Ireland Midlands North West

Need for business-focused bank to support growth in SME sector

Labour European Candidate Lorraine Higgins has said that KfW funds should not go to the pillar banks of Bank of Ireland and AIB, but instead to a new business-focused institution that can support real growth amongst Small and Medium Enterprises (SMEs). “These banks are in danger of missing out on the next Facebook as they are still stuck in the modes of the past and not assessing new businesses on the basis of modern-day business and risk.” according to Senator Higgins.

It is expected that over €100 million in credit from KfW, the German government-owned development bank based in Frankfurt, will be made available to support growth in Irish business by the middle of this year. Senator Higgins is calling on the Minister for Finance to ask the Central Bank to look at the provision of a new banking license for a new institution to administer these funds and support new growth in the SME sector.

“We now have a real issue where lending to small and medium enterprises (SMEs) is declining with figures showing lower numbers over the past three quarters when lending to farms and property companies is excluded. I genuinely fear for a lost decade in Irish business because we have not adequately addressed the deep-seated problems regarding competition and the banking sector.

“SMEs make up 99% of all businesses in this country and yet had a loan rejection rate second only to Greece at 24%, as reported last year. Currently, we are letting the opportunity go to finance Irish businesses and Irish entrepreneurs. We are not offering money to people based on the strength of their business plans but rather on bricks and mortar security and if we do not correct this trend and take remedial action, then we are facing a situation of paralysis.

“If we are really committed to doing all we can for small and medium enterprises, we must take inspiration from what has been done in the UK. The UK Government, through its central bank, granted a banking licence for Metro Bank, which targets almost half of its lending at the small and medium enterprise sector and commercial enterprises. That is the kind of statistic I want to see Ireland boast of.

“As part of my European election campaign, I look forward to getting out there and meeting entrepreneurs and small business owners over the coming weeks. I will be highlighting the success stories of local businesses and communities over the coming months as part of my Making Recovery Local campaign. I believe there is no reason Ireland cannot be up there among the most entrepreneurial nations in the world and be acknowledged as a world-class environment in which to start and grow business. The provision of a dedicated business bank would be a real boost to SMES in this regard.”


Share Button

Leave a Reply

Your email address will not be published. Required fields are marked *