Banks second worst lenders in EU

IRELAND has been ranked as the second worst place in the European Union for providing finance to small and medium businesses.

This is according to figures from Eurostat, the European Union’s statistics office, which revealed that the percentage of unsuccessful applications for bank credit in Ireland by smaller companies rose to 27% in 2010 from 1% three years earlier.

The highest percentage of unsuccessful applications was in Bulgaria at 36%. Ireland in second spot was followed by Latvia (26%), the Netherlands (23%), Lithuania and Britain (both 21%). The lowest was in Finland (0.2%), Malta (2%), Cyprus and Poland (both 4%) and Italy (5%).

The level of unsuccessful applications rose in 19 of 20 EU member states for which data was available. Unsuccessful applications fell only in Sweden (from 9% to 6%.)

Eurostat said the economic crisis has made it more difficult for small and medium-sized enterprises (SMEs) to access banking credit.

Mark Fielding, chief executive of small business association ISME, said small and medium enterprises are continuing to struggle without access to bank credit.

“The reckless bankers who have created the financial crisis, under the eye of Government, must not be allowed to terrorise business owners under the guise of newly discovered ‘prudent lending’,” Mr Fielding said.

“The state, as the major shareholder, must insist on a return to ‘normal economic lending’ to business and must monitor this through proper, honest statistics and returns to the Central Bank. Up to now these returns have been incomplete fairy tales and subject to manipulation by the banks to suit themselves, as was pointed out in three recent reports,” he added.

A spokesperson for the Irish Banking Federation (IBF) said a recent report from the Central Statistics Office showed that 74% of loan applications were fully or partially approved. The IBF said it and member banks are currently participating in the work of a Department of Finance Stakeholder Group which includes the commissioning of market research to provide further insight into the nature and extent of SME demand for credit.

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