AIB to reconsider broker plans

ALLIED Irish Bank has scaled down plans to close off lending through intermediary brokers that channelled hundreds of millions of euro to small businesses throughout Ireland.

The bank had written to small finance lending brokers throughout the country telling them – in a one-sentence letter – that AIB was withdrawing crucial letters of recognition which enabled the brokers to negotiate loans with the bank for clients under Financial Regulator guidelines.

However, following queries from the Irish Examiner, lending firm principals have been told that the bank is reconsidering their plans and will re-start relationships with some, if not all, of the finance houses involved.

ISME chief executive Mark Fielding said the plans had shown AIB in their true colours, displaying a total lack of concern for the small business sector by shafting these intermediaries who have performed a valuable service over the years for many small and medium businesses.

“The type and amounts of the loans and leases are not in the range of the big developers, so loved by the bank but now the cause of the crash. The loans and leases handled by these intermediaries were more for the bacon slicer, cash register or computer for Mom and Pop stores and fledgling businesses not au fait with high finance but honest as the day is long.

“At a time when the Irish taxpayer is rescuing the banks through deposit guarantees, NAMA, and even raiding the citizens’ piggy bank, the Pensions Reserve Fund, we still have examples of the banks’ total two-finger approach to small business,” he said.

AIB said its finance and leasing section operates the intermediary channel for car finance and asset finance applications. AIB said this comprises motor dealers and asset finance brokers who are paid for introducing to AIB, as intermediaries, successfully referred and drawn down business.

“Since early 2008 there has been a significant reduction in referrals to AIB by a number of intermediaries. Consequently it was no longer viable for AIB to maintain the existing service levels to all intermediaries.

“Therefore, a review of this channel was carried out which resulted in a reduction of the number of intermediary relationships.

“AIB remains committed to the intermediary channel and will continue to work with and welcome business from active intermediaries,” AIB added.

One broker whose letter of recognition was revoked, but who did not wished to be named, said: “It’s like having a pub with loads of customers but no beer to sell. There are hundreds of really decent people with excellent track records looking for loans to develop and keep their businesses afloat.”