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Dublin: 9 °C Friday 6 December, 2019

Banking Federation rejects report on lending to small businesses

IBF chief executive Pat Farrell says he had not seen the report but rejected the findings which are reported this morning.

The Central Bank of Ireland in Dublin
The Central Bank of Ireland in Dublin
Image: Wikimedia Commons via Wikipedia

THE IRISH BANKING Federation has strongly rejected the findings of a report by the Central Bank which says that Irish banks have the second lowest approval level for loans to small businesses in the euro area.

Despite having not seen the report, which is featured in a number of today’s broadsheet newspapers, the chief executive of the IBF, Pat Farrell, said that he rejected its findings.

According to today’s Irish Times, the report says that more than one in four Irish businesses seeking a loan or overdraft were rejected in the six months to March which is more than double the euro area average and second only to Greece.

Farrell told RTÉ’s Morning Ireland that data from the Mazars SME lending demand survey, which was commissioned by the Department of Finance, indicated that banks were lending to small business.

“I would have expected something more than a populist line from the Central Bank because quite frankly the way in which the report has been handled and been released falls fairly far below the standards you’d expect from a professional body like the Central Bank,” he said.

“I would reject the findings of the report because the definitive report on this year is the Mazars report and they make reference, I understand, to the Mazars report.”

He said that the survey from Mazars had a much bigger sample than the Central Bank report, entitled Irish SME Credit Supply and Demand, Comparisons Across Surveys and Countries, which comes from two economists in the bank.

Farrell said that the report, which he has not seen, was spinning the findings of the Mazars report.

He continued: “We now have a situation where the Department of Finance and the government is definitively standing behind the Mazars report.

“Now we have this report out of the blue sky coming from the Central Bank which on the face of it seems to be saying completely different.”

He said the analysis of data from other EU nations would have been different to what appears in the Mazars report and therefore it was “comparing apples with oranges”.

Earlier, Mark Fielding, chief executive of the the Irish Small & Medium Enterprises Association (ISME), said that there was a refusal rate somewhere in the region of 50 per cent of all applications for loans according to his organisation’s own research.

“It’s not new news and it doesn’t make me any happier to find out that the Central Bank is now agreeing with us but it is bad out there at the moment,” he told the programme.

The Central Bank said it would not comment on the IBF’s rejection of the report’s findings.

Read: More than 1 in 10 business properties are lying empty

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About the author:

Hugh O'Connell

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