Banks ‘cynically delaying’ loans

Banks are being accused by Isme of adopting “cynical delaying tactics” in the way the financial institutions are handling loan applications.

Isme, the Irish small and medium enterprises association, is furious after analysing its latest Quarterly Bank Watch Survey which shows a decline in lending to SMEs. The survey found the 53% of businesses are being refused loans, four points worse than the figure in September.

Isme chief executive, Mark Fielding, said the demand for bank credit is steady at 39%.

“The delays by cynical bankers has coined a new phrase, ‘constructive refusal’ as they treat the customer with disdain and hoodwink the Government with continuing distorted statistics.

“There is no doubt that banks are not lending to the level appropriate to an economy ‘on the mend’. The statistics from our own Central Bank, the ECB and numerous economists demonstrate the dearth of appropriate credit. We must put an end to the fiction that bailed-out Irish banks are functioning properly. Despite assertions from the banking PR machine, access to credit is abysmal, the application process is getting more torturous and businesses are not being told their rights under the code,” he said.

Among the main findings of the survey were:

* 53% of companies who applied for funding in the last three months were refused credit by their banks, a deterioration on the 49% in the previous quarter.

* 39% of respondents had requested additional or new bank facilities in the last three months, showing an increase from the 38% in the previous quarter.

* 28% of initial bank decisions were made within one week; however the average wait was four weeks.

* 65% of firms state banks are making it more difficult to access finance, down from 72%.

* 5% of SMEs believe Government is making a positive difference to SME lending.

* 46% of respondents had increases in bank charges imposed, as banks revert to “old habits”.

Mr Fielding said it is disappointing in the extreme that, after all of the bailing out and cosseting of banks and bankers, the main rescued banks are not stepping up to the plate.

“The Government, in last week’s budget, acknowledged the importance of the small and medium-enterprise sector and introduced measures to assist. The Government must now demand that the bailed-out banks meet their own commitment to SME lending,” he said.

The ISME boss said the Government must stop merely acknowledging that we have a banking problem and act decisively.


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