CRO a ‘mudguard for the banks’

The Irish Small and Medium Enterprises association (Isme) chief executive Mark Fielding has described the Credit Review Office as “a mudguard for the banks”.

In the last quarter, the CRO was only successful in forcing banks to reverse credit decisions in 10 cases.

The office’s seventh annual report showed that, in the last quarter of 2011, 22 applications were made to the CRO. In seven cases, the banks’ decision to refuse or withdraw credit facilities were upheld while the remainder were withdrawn by the borrowers or lenders.

The credit reviewer, John Trethowan, said: “To be frank, I would like there to be more applications, but all we can do is be there for borrowers.”

Mr Trethowan said his office’s largest expense was on advertising to tell people how to contact the CRO. He said the organisation had run media campaigns in each quarter to try and attract users.

Mr Fielding said the office was not receiving more applications from Isme members because they were jaded by the review processes and had lost confidence in the CRO.

“We had hoped that [Mr Trethowan] would be an advocate for small businesses but he has turned out to be a mudguard for the banks,” said Mr Fielding.

He said the only reason the CRO was able to say the pillar banks had achieved their goal of lending €3bn to businesses was by including the restructuring of loans as new lending.

Mr Trethowan said that restructuring of loans was important to keep credit flowing to businesses. He said that without restructuring more businesses would have gone bust.

In his report, Mr Trethowan said: “I am pleased to advise that AIB and BoI have both achieved their €3bn target on loan sanctions.”

Mr Fielding challenged Mr Trethowan’s analysis of the banks’ track record in lending since the downturn.

He said that targets were introduced for new lending, not restructured lending.

“The banks were never going to achieve the target. It is only being achieved through restructuring of existing lending. Where an overdraft is replaced by a term loan, this is driving our members crazy, to be honest, which is one of the reasons they won’t go anywhere near the Credit Review Office,” Mr Fielding said.


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