BoI pledges to lend SMEs €12bn over next 5 years

Bank of Ireland has pledged to lend €12bn to SMEs over the next five years, saying it is “very much open for business”.

Addressing yesterday’s sitting of the Joint Oireachtas Jobs Committee, the bank’s chief executive, Richie Boucher, stated that with its funding and restructuring plan taken care of, the key remaining issue for BoI was the generation of revenue, which, he said, meant “supporting our customers”.

Mr Boucher said the SME sector remained a key area for the bank and lies “at the heart of our strategy”.

Also addressing the meeting, Liam McLoughlin, BoI’s head of retail banking, said the bank would lend €33bn to Irish firms over the coming five years, with nearly a third of that specifically aimed at SMEs.

He added that BoI received 1,000 SME loan applications, per week, during 2013, with approval rates amounting to 85%, and with strong demand seen from firms in the agri, food and motor sectors.

Mr McLoughlin said BoI remained focused on becoming the number one bank in Ireland for business and enterprise and for lending to viable firms. He noted, also, that Bank of Ireland provided 50% of all non-property-related business loans last year.

BoI also released €4bn via new and improved lending last year, with 50% utilised by borrowers. Mr Boucher noted that a bank only started generating income once a loan had been utilised.

Reacting to mentions of recent reports and surveys noting a frustration among SMEs over bank credit levels, Mr Boucher noted the number of BoI cases upheld by the Credit Review Office. A third of firms originally refused by the bank had since defaulted on their loans.

He said that while SME lending was not “an exact science”, and the bank did get some calls wrong, it still had to be correct on 98% of its decisions.

In response to the Committee’s concerns over further branch closures, Mr Boucher countered that SME lending was, largely, a local branch-led initiative.