Call To Remove State Aid From Non-Lending Banks

Ireland's small business leaders have called on the Minister for Enterprise to remove state assistance from bailed out banks if the continue to refuse credit for businesses.

The Irish Small & Medium Enterprises Association (ISME), urged Minister Batt O’ Keefe, to "hang tough" with the state assisted banks and force them to comply with demands to open up lending to viable small businesses.

An ISME spokesman said failure to comply should result in state supports being withdrawn from the banks concerned.

The Association was reacting to reports that the Government are unhappy with insufficient plans forwarded by the banks on their commitments to provide funding to SMEs.

ISME Chief Executive, Mark Fielding said: “The continuing level of contempt and arrogance shown by the bailed out bankers towards the State and the taxpayers is beyond belief. Quite clearly the banks are attempting to slither out of any commitments made to Government. Decisive action is urgently required to force the banks to open their lending channels, which have effectively remained closed.

“The SME sector has, for too long, been promised decisive action by Government to address this serious issue, with little progress to date. It is essential that the banks are not let off the hook and that sustained pressure is maintained by Government to ensure that those viable SME businesses that require finance are facilitated. The sanction of immediate withdrawal of State assistance must be an option for those banks who continue to selfishly ignore Government demands”.

Meanwhile today, The Labour party have claimed state aid approval by the EU Commission has removed the last "roadblock" to Brian Lenihan’s plan to extend the bank guarantee.

In September 2008, we were told that the blanket bank guarantee would be the cheapest bank rescue in the world, and that it would only last for two years, up to September 29th 2010.

Labour's financial spokesperson Joan Burton said there was a "creeping extension" of the bank guarantee scheme, "with taxpayers set to remain on the hook for upwards of €200bn worth of the banks’ liabilities for up to 5 years".

Ms Burton said Irish taxpayers will also be looking at upwards of €40bn through NAMA.

"Far from being a cost-free bank rescue, the blanket bank guarantee has come to be a financial millstone likely to weigh down Irish taxpayers for generations to come," she said.

Ms Burton added: "Indeed, in his recent report into the banking crisis, the Central Bank Governor, Patrick Honohan, has said that the blanket nature of the original bank guaranteeThe government has recently admitted that the €22bn pumped into Anglo Irish Bank is unlikely ever to be seen again. The €2.7bn and counting being pumped into Irish Nationwide is likely to suffer the same fate."

(DW/BMcC)