Call to ring-fence €500m SME fund

A substantial proportion of the €500m being made available by the Strategic Banking Corporation of Ireland — the State’s new ‘SME Bank’ — needs to be put into the hands of alternative funding providers, rather than the domestic pillar banks for the project to work, it has been claimed.

The Irish arm of Bibby Financial Services — one of the world’s leading SME funders — has, as part of its pre-budget submission, called on the Government to “ring-fence” a substantial amount of the initial €500m for alternative lenders, who should then be required to distribute the money directly to Irish-based SMEs.

According to Bibby Ireland, without such management, the money — which is from the European Investment Bank, the former National Pension Reserve Fund and Germany’s State-owned development bank, KfW — could all be allocated to just Ireland’s two pillar banks, Bank of Ireland and AIB, “without any guarantees that these institutions will then pass this funding on to SMEs”.