|
(Speaker Continuing)
[Mr. Niall O'Donnellan:] The Deputy asked earlier about some of the issues. Export working capital remains a major issue for our exporting companies as they enter new markets and try to root themselves there. Having the ability to offer flexible terms to new and existing customers and having enough money to spend on the sales forces they need to put into those countries are extremely important. Lack of export working capital is a major constraint on many companies and is a gap in our banking system. We know our companies are in competition with those from other countries with more supportive banks and government-backed risk sharing schemes such as the export credit insurance scheme in Germany and the Export-Import Bank of the United States. We see measures like these as being particularly important, a major priority for the agency and our clients and an input into the action plan for jobs 2013.
Deputy Simon Harris:   That was a very enlightening answer which we probably needed to hear because I had never before heard of our banks being so ill-equipped in terms of knowledge to deal with an export economy. It is very helpful to have that acknowledged here. Is the situation in our banks improving? Mr. O'Donnellan has been dealing with them since 2008. How does he find the situation now? If he does not wish to answer the question, that is okay.
Mr. Niall O'Donnellan: In fairness, progress has been made. There is much greater awareness, particularly at the centre of the banks, of the issue and the major opportunity it presents for Irish banks. Central contact and liaison teams have been established in the banks. In addition, our CEO meets the CEOs of all three major banks every six months which has helped stimulate and push forward the agenda. Progress has been made but the shared view among clients, banks and ourselves is that there is certainly a lot of ground to be made up. We are still not where we need to be from the broader perspective of being a small, open exporting economy.
Deputy John Deasy: If Mr. Ryan does not mind, I will stick with Mr. O'Donnellan on that very relevant point. When one hears news reports about many AIB bank branches around the country not having computers or not being linked up to the Internet, one may not be surprised by what Mr. O'Donnellan has just said. People will be concerned about State-owned banks having that kind of skills deficit. He picked out those three areas and said they are not fit for purpose with regard to the modern technology economy, geographical issues, markets outside the UK and the EU and the global economy. He also pointed to issues relating to certain kinds of products. Bankers have been telling me for some time that foreign banks located here are taking advantage of the deficits that exist in our banks and are doing so not just from the standpoint of an information or skills deficit within banks but also the lending regimes. Could I explore this issue with Mr. O'Donnellan? He said there is ground to be made up. It is a serious issue. The question is what needs to be happen.
Mr. Niall O'Donnellan: As I already said, there is an agenda of action and change in the three primary banks which certainly acknowledge the issue and have in various ways made investments and efforts to address the issue. The things are major changes which require major changes within their systems to take place. In respect of foreign banks, from our perspective, our focus is on the needs of our clients. We are strongly of the view that there needs to be an improved response from existing banks located in Ireland. We are also very positive about other banks getting involved and supplying the needs of those clients. For example, the entry of Silicon Valley Bank into the Irish market is a very welcome development. This is a highly specialised bank which originated in Silicon Valley that is deeply experienced in lending and investing in software companies and the software industry. This is an industry worth over €1 billion on the indigenous side. Silicon Valley Bank has entered the Irish market with a view to providing facilities to some of our companies that have particular growth and export potential. We see that it will be able to co-operate with existing Irish banks but also compete with them. From a broader perspective, that is a welcome development. There are other overseas banks with a particular interest in some aspects of the Irish exporting sector.
We see it as a need for a richer and more developed ecosystem that includes all elements in competition and co-operation. The primary banks are particularly focused on the full range of companies in terms of size while typically many foreign banks entering our market might focus on the larger SMEs or the mid-caps. We think everybody has a role to play. For us, it is all about the needs of our clients and building up the capability of the various elements of the banking world to respond to those needs. The launch of the SME credit fund by the NTMA, which is a non-banking solution, is also part of attempts to build up a range of supports and credit facilities, both banking and non-banking, which meet the needs of our exporting companies and the full range of companies in the wider economy.
Deputy John Deasy: In respect of the more fundamental mainstream issue of lending in its purest sense, I know every company is different, as Mr. O'Donnellan explained. He spoke about the percentages with regard to companies with which Enterprise Ireland deals and the credit facilities they were given. Dealing with those three main banks, what kind of problems exist with regard to that element? Are companies going to foreign banks as a result of not getting credit from those three main banks?
Mr. Niall O'Donnellan: It varies from company to company and depends on the relationship the company has with the bank and the history in many cases.
Deputy John Deasy: I am asking whether problems exist. What are the problems with our banking sector with regard to the fundamental issue of lending to these kind of companies?
Mr. Niall O'Donnellan: There are still issues on the supply and demand sides. Deputy Deasy indicated some of them with regard to the supply side in terms of the banks. These problems concern their experience of cashflow lending and the skill they have in that. Banks are now re-skilling and upskilling their front-line teams to be able to deal with the full range of businesses in the Irish economy from the microbusiness to the small business to the medium-sized business to exporting elements and some of the larger companies. That is an issue of skill and confidence, particularly on the front line. They are very important issues that banks are seeking to address. The supply of funding is important and their relationship with the EIB is particularly important in terms of being able to access funding for SMEs. I have already referred to the AIB facility of €80 million which is particularly important because it is targeted at innovative companies, particularly exporting companies.
Deputy John Deasy: Mr. O'Donnellan also mentioned our competitors in other countries who have access to government-backed risk sharing schemes. Is there a deficit here with which we need to deal?
Mr. Niall O'Donnellan: The short answer is that there is a deficit. We regard this as a very important issue to address. We need to understand the various needs of our companies from a working capital perspective and the responses that companies in other countries can avail of for similar needs
|
Page of 17
