AIB admits dissatisfaction with level of SME lending

One of Ireland’s two pillar banks have admitted that it is unhappy with the levels of new credit it has been providing to businesses.

The head of business banking at AIB, John Webb, said AIB had only provided €400m in new credit in the first half of the year.

“For the first six months of this year, we have lent out €400m in new credit stimulus. And you know that performance is slightly lower than our expectations for this year,” said Mr Webb.

This was the first admission by the banks that the levels of lending were not meeting the targets set by the Government. The revelation came on the back of the contentious Central Bank report which found that Ireland had the second lowest levels of lending to small and medium enterprises (SME) in the EU.

Mr Webb said AIB has had to retrain some staff in how to lend to SMEs and wean them off the asset-backed lending that characterised the Celtic Tiger.

“We’ve been doing an awful lot in terms of training our frontline staff in moving towards cash-based lending from the asset-based lending of the past,” said Mr Webb.

“The message going out to our frontline staff is we have the capital, we have the liquidity, we have the risk appetite, we are implementing a policy, very much of support, lending to viable businesses.”

Mr Webb urged people with viable businesses to come into branches and meet with staff if they were interested in taking advantage of the credit facilities that the bank is making available.