John Trethowan, Credit Reviewer today (5th of June 2012) published the eighth quarterly review of the Credit Review Office. The report outlines the activities of the Credit Review Office since his last report at the end of February, and also highlights Trethowan’s observations on the market conditions in the SME sector. John Trethowan will be holding a press briefing on his report in the Department of Finance at 11am this morning.
Commenting on the market conditions observed over the period Trethowan stated: “I observe that the two pillar banks are largely being supportive of medium and low risk new lending proposals from well established SMEs and farms which already bank with them. However, I am disappointed that there is not more evidence of support for ‘enterprise risk taking’ on new and increased lending in the banks’ current lending policies.
The challenge for banks is to develop approaches which can provide credit for all viable businesses within the SME sector to ensure they fully support a recovery in the economy.
Commenting on the Credit Review Office activities over the period Trethowan stated:
“Over the past three months the Credit Review Office has received 44 applications from SME’s who have been refused Credit by AIB and Bank of Ireland; the two pillar banks.
Work is ongoing on 31 cases. Of the cases completed in this quarter, 17 bank refusals were overturned resulting in the two banks subsequently supplying €2.0M of credit, supporting a further 140 jobs in the SME sector.
Since the Office’s establishment in April 2010, 197 appeals have been received. Of the cases completed, 69 of these refusals were overturned resulting in the banks subsequently supplying €6.9M of credit, supporting 683 jobs in the SME sector; 48 of the cases have been upheld in banks’ favour.
I would encourage any viable SME or Farm who has been turned down for a loan application to contact the Credit Review Office at 1850 211 789 or at info@creditreview.ie.”
Progress in Quarter One against the €3.5Bn Targets:
· The annual combined sanctioning target for 2012 is €1bn higher than last year.
· Combined Loan sanctions levels in quarter one are broadly similar to the figures for quarter one last year.
· If 2011 patterns are repeated this year, lending levels increase after the summer (quarter three).
· Lending transactions recorded by the two banks in quarter one are @15% lower than quarter one last year.
· These numbers are a function of a number of variables:
(i) A softness in demand for lending reported by the banks, and observed by both Mazars and recent Central Bank reporting.
(ii) Borrowers paying down debt rather than seeking new loans.
(iii) The tighter credit conditions in banks.
Credit Review Office Client endorsements
Darren Grant opened the Organic Supermarket in Blackrock, Co. Dublin in July 2008. He initially received bank support to get started, but with the business growing in 2010, he needed additional bank funding and was refused.
He appealed to the Credit Review Office who he says “were fair, friendly and efficient. After 14 days they came back with a recommendation that the loan should be granted. Basically, that decision saved the business and 8 jobs. We have gone from being on our knees to being able to develop the company without financial worries.”
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Accountant Paul Russell of Ardagh Consultants in Drogheda, recently used the Credit Review Office to appeal a bank decision on behalf of one of his clients. (Ardagh offer business support services across all business disciplines to individuals and companies.)
According to Paul, “Regardless of the outcome in this case, I have found the experience in dealing with your office to be refreshing and not at all what I had expected to be honest. I would certainly have no hesitation in using your office should I have a similar case in the future or in recommending that any of my colleagues use the excellent service you provide. All responses were extremely punctual and helpful. The procedures were very easy to follow, and the reviewer was practical and business oriented.” [ the case was later resolved in the borrower’s favour].
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Sharon Farrell established the Fun Galaxy Learning and Activity centre in Airside Swords in 2007. She opened a second operation in Ashbourne in 2010, but the costs of the new centre were a heavy drain on cashflow and the business needed a term loan to complete the expansion.
On being refused by the bank, Sharon appealed to the Credit Review Office and says “I found them brilliant from the beginning to the end. They were helpful and positive in every way. Going through the process also made me more financially aware.”
Matt the Threshers restaurant and pub in Birdhill has been in business for over 25 years and has strong brand recognition nationally. In 2010 they decided to capitalise on their brand by opening a gastro pub in what was formerly the Pembroke bar in Dublin 2. They sought bank funding for the fit out costs but were rejected.
According to the promoter, Jimmy Lyons: “The bank did not want to lend to pubs or restaurants. However we believed there was a gap in the market in Dublin 2 for a bar specialising in the very freshest Irish seafood and shellfish. We would not have got the business started without the help of the Credit Review Office. It is going very well for us – it has become a firm favourite with locals and tourists we are booked out on many evenings and typically turning people away at lunchtime. Over 30 people are now employed in the business.”
He also comments “After recommendation from CRO, (the bank) were very quick to get money drawn down and were also helpful.”
Animal’s Choice Limited is a start-up company in County Limerick, processing Miscanthus for use as animal bedding for farm animals, poultry, horses and the small pet sector. The company had been seeking grant aid but could not be approved until matching finance was in place.
According to one of the promoters Julianna O’Brien, “The helpline and office staff were very positive and helpful from initial enquiry throughout. They responded to any queries promptly and explained the process thoroughly. They were very accommodating, using email while I was in Australia and had time zone issues. Our business is now up and running and would not have been without the Credit Review Office. Our relationship with the bank has not been negatively affected as a result of going through the review process
Pease contact the Credit Review Office helpline on 1850 211 789 if you would like contact details for any of the above.