SME Banking must be prioritised
- Government needs to prioritise publicly owned regional banks that could cater to the requirement of our indigenous SMEs.
Alan Kelly TD has urged the Government to put their money where their mouth is and support hard-working SMEs.
Deputy Kelly said:
“The headline of Sunday’s Business Post article should send a chill down the backbone of the Minister for Finance, supposing he has one, “Squeeze on lending by banks leaves small companies reeling”. As Dr Frances Ruane of the National Competitiveness Council points out “today’s investment lays the foundations for SMEs to survive and thrive in the years ahead” and “many SMEs are simply coping with the present challenges and are too risk averse to invest in innovation”.
“The Department of Finance has been asked on numerous occasions to look at the benefits of having a publicly owned regional bank that would specifically address the needs of our indigenous SMEs. This has resulted in the Local Public Banking Report, The Indecon Report and finally the Retail Banking Review. What these documents all had in common was the Department of Finance slapping themselves on the back, declaring we have plenty of banks to go around and continue with a “business as usual” approach.
“To add insult to injury, the Department of Finance insists that recreating a bank similar to the ACC and ICC would “displace” the credit unions, rather than recognising the synergies and support that such a bank could give to the credit union movement. Everyone seems keen to push the idea of credit unions as community banks, but what seems to be ignored is that credit unions are not banks and do not want to become banks. They are 200 member-owned cooperatives that are highly trusted in their communities, clearly not banks!
“Our sister Labour Party in the UK have also recognised the value of the state creating a public bank in their policy proposal “A New Public Banking Ecosystem”. They propose Regional Development Banks that would have a mandate to encourage and develop the SMEs in their region. Our Department of Finance has been given a similar proposal in the form of a Business Plan for a pilot Midlands Bank that would set the ball rolling in this country. There is also willing expertise to assist in setting it up.
“Foolishly Government ignores the plight of the SME sector again and again, despite consistent reports from the Credit Review Office pointing out the lack of banking services specifically suited to the SMEs needs, despite the yearly Credit Demand Survey reporting lacklustre appetite for credit, despite the clear link between lack of investment and low innovation.
“The Government are at pains to tell us that the bumper Corporation Tax take is not to be relied on while studiously ignoring the actual backbone of our economy, that employs over two thirds of the country’s workforce. Ministers McGrath and Donohoe claim to be prudently creating a Sovereign Wealth Fund to invest in infrastructure when times are tough. What better than an infrastructural bank to invest in our communities and promote regional development?
“It’s time the government prioritised our hard-working, indigenous SMEs and gave them the basic tools they require; an institution dedicated to providing essential financial services that will provide investment on a regional basis that will promote prosperity and support innovation.”