O’Keeffe: Banks in denial on credit

BANKS are in denial if they believe sufficient credit was being provided for small businesses, Minister Batt O’Keeffe has claimed.

The Minister for Enterprise, Trade and Innovation has once again questioned the accuracy of research which claimed four out of five businesses seeking credit are successful.

The minister outlined his concerns in an exchange of letters with the Irish Banking Federation (IBF) over lending issues.

Chief executive of IBF Pat Farrell wrote to Mr O’Keeffe to express “concern” over remarks he made on radio questioning the accuracy of the Mazars Report which the minister said was being “put out by the banks”.

Mr Farrell said the report was “commissioned by the Government through the Department of Finance in order to provide an independent, reliable accounts of the availability of credit to SMEs”.

In response to Mr Farrell, the minister said the Department of Finance has “no role in commissioning the report – rather it was commissioned solely by the IBF.”

He said the report contained “incomplete information” concerning informal applications for credit which are not tracked by the banks and that there was no survey of demand in the third report which “undermined the credibility of the whole Mazars exercise”.

Mr O’Keeffe said trust has been undermined by the leaking of a report by the Credit Supply Clearing Group in which the freeing up of bank credit is discussed with the aim of providing a mechanism for lenders to address how their stated credit policies match the current realities of business lending.

Meanwhile, a survey has shown that Irish firms are leading the charge for a change in the accounting rules governing their businesses. The report, carried out by accountants Grant Thornton, showed that Irish businesses ranked first globally when it came to “awareness” of the new accounting code – IFRS for SMEs.

The new standard, now postponed until 2013, has been developed specifically for private companies, reducing the burden of red tape on business owners as well as facilitating international transactions.