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When Size Matters

When size matters 

19th of February 

At ISME we welcome the Strategic Banking Corporation of Ireland (SBCI), set up to provide low-interest rate loans to SMEs – the true economic backbone of the country. This initiative could potentially be of great benefit to job and wealth creating Irish SMEs but only if the Government ensures that the bailed-out banks stick to the rules.

Feed the rich, starve the poor

ISME is constantly monitoring lending patterns to business and what we have seen is the starving of credit to smaller businesses while the banks have traditionally overfed big businesses, many of which have used that money to expand overseas – nigh-on useless to the Irish economy.

Bankers – better at fudging than banking

We would have preferred at ISME if a separate bank, something like the old ICC Bank, had been set up but given where we are we now have to make sure that the Government makes absolutely sure that this new funding is not misallocated. These funds are meant to be given to SMEs and no excuses or bank fudging (they’ve shown themselves to be better at fudging than banking in recent years) in the giving out of these funds can be tolerated.

Errant bankers need to be shown red card

Let’s see if the Central Bank can do at last what it should’ve done during the boom years and actually monitor the banks correctly. We need to see regular reports and to make sure that the bankers, who are more interested in  big bonuses than in small business, are not allowed to give these cheaper funds to refinance large businesses. So far all we’ve seen by the Central Bank referee is the use of the Black Card (used by the GAA to stop cynical behaviour) that allows players to be substituted.  What we need to see is the use of the  Red Card (off the pitch for good) for those senior bankers who don’t comply with what is public policy – that is, who don’t do what the democratically elected government tells them to do for the good of the country.

Acting as TMO (television match official) at ISME we want to see;

  • Monthly returns on loans applied for and made, be returned separately to the Central Bank,
  • To show the type, duration and interest rate on each loan made from SBCI funds
  • And we want to see the recipients by size and sector.

This might, just might, assist in monitoring the loan books and hopefully stop the rescued, risk-averse banks dealing only with ‘low or no risk’ lending.

We’ll be keeping a close eye on proceedings.