Ministers haul in AIB over loans

AIB was hauled before key government ministers last night to explain their failure to lend enough money to support business.

Bank chairman Dan O’Connor and chief executive, Colm Doherty met with Finance Minister, Brian Lenihan, and Enterprise Minister, Batt O’Keeffe, to discuss the findings of regional meetings held by government representatives with business bodies.

One of the key findings was that AIB was not playing ball and that small and medium-sized businesses were being pushed to the limit by AIB’s failure to give loans to support their day-to-day activities.

Not only is money difficult to get, but those consulted also said the terms and conditions attached to loans, when sanctioned, were impossible to meet in many instances.

Prior to last night’s talks at the Department of Finance, Mr O’Keeffe made clear that banks who have loans with NAMA can be compelled by the state to lend to hard-pressed firms.

Groups such as ISME and the chambers of commerce have also complained that the review body set up to adjudicate on loans refused by the banks was packed with former bankers.

The employers’ bodies have called for businessmen with track records to be appointed to the appeals mechanism to ensure that business gets a fairer hearing all round.

If the banks do not lend, “our recovery will be paralysed and we are determined not to allow that to happen”, said Mr O’Keeffe, ahead of last night’s meeting.

“The Government has statutory powers to compel banks covered by the National Asset Management Agency legislation to lend. The Minister for Finance has power under Section 210 of the NAMA Act 2009 to issue guidelines with which NAMA banks must comply.

“The Government will monitor very closely the banks’ progress under the lending plans and any indication that there are unexpected problems with a particular sector or region will be investigated.”

Ahead of the meeting, a spokesman for AIB said the bank had no comment to make.

It has emerged from the regional meetings that have already taken place that many businesses and business representative bodies are unhappy about the definition of what a “viable” business is meant to convey.

ISME and others want a clear definition of that term for future reference.

Sources close to the meeting said AIB executives would have been given a very clear message about the level of support the Government expects it to give to Irish businesses in the current difficult economic environment.

Mr O’Keeffe added: “I would urge business-owners to always make a formal written application when seeking credit from banks and to use the full appeals process in the bank when credit is refused.

“That allows individual credit applications to be monitored and it facilitates the assimilation of information on an individual bank’s performance in approving applications.

“Transparency is an important part of our efforts to get banks lending to viable small businesses.”


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