Wednesday, March 31, 2010
THE burden on taxpayers is "horrifying," according to Finance Minister Brian Lenihan, but €6 billion NAMA measures on bank lending have been welcomed by Irish business groups.
Specific lending targets imposed on banks must be enforced, the Irish Small and Medium Enterprises Association (ISME) declared.
The association called on the Government to rigorously monitor the banks to ensure the commitment to increased lending is met and that viable businesses that require finance receive it.
Any bank refusing to comply should be penalised and refused any further State assistance, according to ISME, chief executive, Mark Fielding.
"The Government needs to be aware that the banks, unless challenged, will use the NAMA process for their own devices and have no interest in supporting other parts of the economy. NAMA will eventually lead to a stronger banking sector, but it will also lead to a substantially weakened indigenous SME sector, unless the Government makes good on its commitment to increase bank lending," he said.
IBEC, the group that also represents Irish business, said "NAMA will only help economic recovery if it results in increased lending to business. The Government and the banks must now work together to ensure that the availability of credit to viable businesses is fully restored."
Mr Lenihan has imposed specific lending targets on AIB and Bank of Ireland.
"They will make available for targeted lending not less than €3bn each for new or increased credit facilities to SMEs in both 2010 and 2011. This in particular must include funds for working capital for businesses. This will be a significant increase on the figures reported by the banks for 2009 and will help to sustain the economy and foster growth. This figure will be reviewed as the needs of the economy change," Mr Lenihan stated.
Bank of Ireland and AIB must make available €20 million each for seed capital to be provided to Enterprise Ireland supported ventures.
The banks will each set up a fund of up to €100m for environmental, clean energy and innovation projects in addition to the €100m provided under the re-capitalisation last year, Mr Lenihan said.
The Irish Hotels Federation said the decision to compel AIB and Bank of Ireland to provide at least €3bn in new or increased credit facilities will go a long way in alleviating difficulties experienced by small and medium enterprises.
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