Plenty of guff
According to an article in @sundaybusiness yesterday the government is about to make Ireland an even harder little country to do business in. With the Budget only weeks away (it’s due on October 13th) there’s no shortage of guff from so-called experts about what’s likely to happen and as usual some of it is bound to be incorrect. Given that caveat, the Sunday Business Post says that the bank levy, currently at €150m, will be doubled.
But no money
For seasoned observers, such as ourselves at ISME, this could smack of a great bit of grandstanding by the Minister for Finance to show how tough he is on the banks. Banks are, after all, still deeply distrusted by the bulk of the population and particularly by the business community. Banks have failed, in our view, to try as hard as they should to lend to the SME sector in particular, the source of the real economic recovery.
Not a refusal is a refusal
In fact, last Friday the government implicitly further acknowledged the banks’ reluctance to lend to businesses. It announced that the small State-run lender, Micro Finance Ireland, that lends businesses up to €25,000 unsecured, can now lend money to borrowers without needing a letter of loan refusal from a bank. Could this be because these refusal letters are as rare as hens’ teeth? As the banks don’t actually refuse businesses the money; they just ask that you offer up your first born child before they’ll even consider your application, then they delay and delay. It’s not a refusal but it sure ain’t an offer of a loan.
From the ‘you couldn’t make it up’ department
Minister Noonan’s wheeze, if carried out, of doubling the levy to €300 million would be silly on so many levels.
- AIB would be paying 40% of it. The State owns AIB. The State would be borrowing from Peter to pay Peter. #fail
- The waste of resources by the State sector is one of the un-investigated scandals in this country. At ISME we get that sinking feeling again when we see the State trying to get its mitts on €300 million that we know will be used to reinstate some archaic public sector practice like time off to go to the bank or ‘rain money’ – anything that will buy some votes. #fail
- Banks will just recoup the extra levy from yours truly – the SME customers. #fail
- Could it be that the Minister doesn’t actually understand how banks work? If the extra €150m he may take from them is the bank’s capital then that reduces the banks’ ability to lend very significantly. Depending on banking ratio requirements that amount could amount to a drop of up to €1 billion in potential lending. #huge fail
No, we’re not going soft on banks. We are doing our lobbying best to get more badly needed working capital for businesses. The maths are simple. More working capital equals more jobs. More jobs means more taxpayers. More taxpayers means much, much more money than any bank levy will ever deliver to the State. Minister, don’t do it.