Lenihan: Banks will loan €12bn to business

BANKS will be forced to make €12 billion worth of lifeline loans to struggling businesses, Finance Minister Brian Lenihan last night pledged.

Mr Lenihan said he would bring in statutory orders if AIB and Bank of Ireland failed to let credit flow to hard-pressed firms.

The Finance Minister issued the threat as he unveiled details of a two- year plan for each of the two major banks to lend €6bn each to companies to help push Ireland clear of recession. But Fine Gael finance spokesman Michael Noonan dismissed the minister’s claims as empty threats which would cut little ice with banks.

The two big banks will have to provide monthly progress reports to the Government as Mr Lenihan warned economic recovery would be stunted unless the part-nationalised institutions showed greater flexibility towards viable businesses.

The Credit Review Office under John Trethowan will act as an appeal authority for companies which feel they have been unfairly refused credit by the two big banks.

Mr Lenihan insisted the money would come from the banks themselves and not from the Government.

“It’s their money — this phrase “taxpayer’s money” is bandied about, but it’s money on the balance sheets of the banks, they have to fund themselves. At the heart of the Government’s banking strategy has been the need to sustain viable banks in Ireland that can fund themselves,” he said.

Writing in the Irish Examiner, Mr Lenihan also stressed that the credit reviewer would “name and shame” any banks that are not fulfilling their lending requirements.

Mr Lenihan appeared to contradict Energy Minister Eamon Ryan’s assertion at the weekend that the €12bn in credit would be focused on export-led companies.

The Finance Minister said all firms would be eligible after strong criticism from small business association ISME that the facilities would be too restrictive.

Mr Noonan said the credit scheme was a missed opportunity and that a state-backed guarantee scheme similar to ones operating abroad would be the best hope for Irish business.

“The truth is that Bank of Ireland and AIB are using financial support from the taxpayer to pay down their own debts, rather than lend into the economy.

“Against this background, there is little the Government can do to force over-borrowed banks to lend if they don’t want to,” he writes in the Irish Examiner.


From Audrey Hepburn wearing a strapless ballerina gown, to Angelina Jolie in a suit, the red carpet rarely disappoints.13 of the biggest fashion moments in Bafta history

You might not be able to dictate when you menstruate, but you might be able to help alleviate some of the symptoms.Can you ‘biohack’ your period?

The American actor never fails to impress with her fashion choices.Blake Lively’s 7 best red carpet moments

Let love bloom with these heartfelt choices. By Hannah Stephenson.5 of the most romantic plants for Valentine’s Day

More From The Irish Examiner