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Opening Of SBCI May Not Help SME Sector

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Opening Of SBCI May Not Help SME Sector

The Strategic Banking Corporation of Ireland (SBCI) is due to open this week, with the aim of kick-starting lending to the small and medium enterprise (SME) sector.

However, analysts suggest it may not have the capacity to meet operators’ financing demands.

The target comes on the back of complaints from business lobbyists that banks are not giving out loans readily enough.

The bank will issue funds from an €800 million pool, made up of European and German development money and Irish pension funds, to local lenders, offering discount rates providing the savings are passed on to SMEs.

The government hopes the money will attract more entrants into the SME lending market, through “low barriers to entry for new financiers”. 

However, “cheaper funding alone” will not be enough to help the SME sector, Goodbody Stockbrokers told

Analysts said the €800 million funding pool is only likely to equate to around 3% of the SME loans, not related to property, which were feeding in the lending system, reports.

On the other hand, they added, “We are encouraged for lending prospects in this sector given the strong macro-economic trends, particularly on domestic demand, which should more meaningfully feed through for new lending prospects”.

Total borrowings for domestic SMEs have been falling for three consecutive years, although lending is beginning to increase in recent months, as the economy continues to improve.

© 2014 - Checkout Magazine by Emily Horne

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