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THE GOVERNMENT HAS taken the wraps off a new bank for small and medium enterprises (SMEs), with an initial budget of €500 million.
The announcement today was made with some fanfare, with the Taoiseach and Tainiste accompanied by Jobs minister Richard Bruton and Finance minister Michael Noonan.
News of the new bank has been floating around since the beginning of the week, but today’s announcement put meat on the bones of what we knew already.
What is it?
The SIBC is designed to plug a hole in the finances of many SMEs around the country. Small businesses in Ireland are crying out for funding, but they face a plethora of problems mean that they can’t get access to the funding that they need.
Problems? Such as?
Lobby groups representing the segment have long cried foul over the lending practices of banks to smaller businesses.
Most recently, ISME came to the Jobs committee with a list of complaints that included inexperienced bank staff, a fear of making decisions without getting sanctioned by higher bank officials, and unreasonable guarantees being sought for small sums.
The banks have also been charged with offering terms which make it impossible to draw down loans, and discouraging applications that have no chance of being accepted to keep their approval rates artificially high.
In response, bankers have said that many credit facilities for SMEs remain underused.
The pillar banks (AIB and Bank of Ireland) do have targets for lending into the SME sector, but some industry observers have leveled the charge that banks are “cherry-picking” the least risky loans.
Basically, the SME sector say that the banks can easily meet these targets while the sector remains drastically underfunded.
They can do this, it has been alleged, because Ireland is comparatively under-banked: that is, we don’t have enough banks. This means that the demand for finance is too big to be met by the banks that are lending, so they can choose the least-risky applications.
In addition to this, many business customers of smaller, foreign banks that are exiting the market are being confronted with the harsh reality that they may have no bank once that happens.
These businesses are also on the hunt for new homes, adding to the amount of demand for credit among the country’s SMEs.
And how much is the SBIC going to have to play with?
The initial budget for the bank is €500 million. While this is a good bit less than had been floated earlier this week, Finance Minister Michael Noonan said today that he hopes to up that total before the end of the year.
When can businesses expect to see some of this cash?
The next item on the agenda is getting the law supporting the SIBC passed through the Oireachtas. Noonan told reporters this morning that he hopes to get that done before the Dail rises for its summer break.
The next steps will become more clear once that happens, although the Finance minister said today that he wants the bank to be lending before the end of the year.
Where is this €500 million coming from?
Some of the cash will come from the former National Pension Reserve Fund, which has been reconstituted as the Irish Strategic Investment Fund.
More will come from the German government-backed bank KfW, which has lent extensively to the peripheral eurozone countries (the bailout pack. The PIIGS. Whatever they’re calling us now).
A third strand will come from the European Investment Bank funding, the bank has a mandate to push funds into European economy.
More investment could come from more of our continental neighbours, Noonan said this morning.
Other European countries have expressed an interest in putting small amounts of capital in in solidarity with Ireland.
When pushed, the Minister said that France was one country that was looking at sinking some cash into the Irish SME sector.
So where can we apply for this cash?
The bank, while it will be a lender, won’t have any front of house staff or branch network.
Existing high street banks will administer the fund, while the Government also seems to have indicated it will be available for other banks that might want to enter the Irish market.
What’s the verdict?
So far, reaction has been positive from lobby groups representing the sector. ISME welcomed the announcement, saying that it had been lobbying for the measure since the bank crash first happened in 2010.
However, Mark Fielding said that there needed to be safeguards put in place to make sure the funding got through to the smaller businesses that are most hard-pressed.
“The fear among credit-squeezed SMEs is that the bailed out banks will revert to form and divert these loan funds to ‘safer’ large businesses. Our banks have form in this area and previous European low-interest loans found their way to less risky larger business, making a killing for banks while starving SMEs of much needed finance.”
The Small Firms Assocation joined ISME in welcoming the new deal, but warned that “the €500 million of funds being made available is a tiny fraction of the current €27 billion business banking market. Much more ambition is required.”
What else should we be watching out for?
The new funding package will be a welcome addition to financing options for banks. However, many in the sector will want to make sure that the totality of the funding goes towards new lending.
Previous targets set out by the government in relation to lending to the sector have often been met by restructuring existing loans or rescheduling repayments, sources in the SME community said. For the maximum impact of this to be felt, it needs to go into the coffers of small businesses around the country.
Finally, the new funds do not erase the problems facing the SME sector when it comes to finance and banking.
Many are still being left without a bank by the exit of foreign players, and as the SFA has pointed out, there is much more than €500 million worth of demand in the marketplace.
Also, the new supply of credit will do little for the cadre of very indebted businesses that are struggling to stay afloat.
Are you a small business owner? Let us know what you think of the new bank in the comments.
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Finally……..this will be fantastic when it’s completed.
This should cost around €500m by the time it’s completed.
Fantastic my a***
Find a construction project from the past few years to back that up? I think you’ll find it difficult.
More money for the big Dutch construction firm…
I think Michael is referring to both the Port Tunnel and the M50… I hope you’re wrong…
Lmao
We could do this every year we halved the foreign aid budget.
My husbag-self employed– gets quite a bit of work from BAM and also my brother is in full time employment with them… I know of quite a good few people that are irish and employed by them- it saves my family and my brothers family from having to move abroad for work…
Has the New Ross bypass been given the go-ahead or is it still in planning?
How much are we paying in compo per week to operators of M3 and M7 tollways?
100 k per week,
Multiply that by 25 years
Correct me if I’m wrong. But didn’t the work on Newlands Cross commence months ago? Why is this being announced today. Is there an election looming by any chance?
Yeah… This was last year… I thought that email notification looked a but odd…
Will it be tolled though is the most important question?
As far as I know this can’t be tolled as there is no other alternative route. For example you can drive from Maynooth to Kinnegad and avoid the toll by going through Enfield, but the N7 toll would have no alternative route.
Can you imagine the anger if people suddenly had to pay on a journey which was always free?
All PPP projects are tolled (that is the concession for the NRA not putting up the full cost of the road). If the tolls don’t pay for the road and interest, then the state will pay BAM directly. These models have failed terribly for the sake of short term infrastructure gains – the m50 made ntl a (semi corrupt) fortune and we ended up paying extensively over the costs to ‘relieve’ them while retaining tolling. The other PPPs (apart from the M1) are all loss making and the state would have been better off building the things directly out motor tax returns and letting people use them.
Good question on the tolling – usually a “concession” allows tolling. I can’t imagine that Newlands Cross being tolled?!?
No they won’t.
It won’t be tolled according to Conor Faughnan of AA.
Brian we weren’t gonna get water tax either but here we are on the verge. If it suits “them” it’ll be tolled no matter what they say now.
The guy from the NRA was on the radio today. They won’t be tolled, they’re on a deferred payment deal of some sort.
Long overdue. The N7 problem will be hugely relieved with the upgrade to Newland’s Cross.
Well I see Ireland has not changed still fuc&&ing moaning
Moans about Ireland moaning…
Hopefully it will be built correctly unlike the N7 between Newlands X and Naas which turns into a swimming pool every time there is a shower of rain!
Sent many a golf ball onto that junction while playing golf at Newlands..
So that was you. Now, where did I put that repair bill……..?
123 fake street Dublin.
Watched an ambulance with it’s sirens flashing wait 4 minutes trying to cross this Newlands Cross junction from the Belgard Road to the Fonthill Road. Hopefully it wasn’t responding to something too serious.
Ridiculously long sequence on the lights at Newlands Cross.
Good news! Both projects should have been done years ago.
yes ,once again bad planning and brown envelopes were 2 blame again
Would you give me tonight’s lotto numbers please!
What a difference that will make! It’s badly needed.
Ok, this is a bit more like it. Lets hope some more projects like this can get started soon
Thank god they are not putting tolls on these roads. They are badly needed inprovements.
A bit of progress on the jobs front can only be looked on as a positive. More of the same please.
The flyover is great news but I think the country needs some form of rail network to connect Hueston and the airport
Think what could be done with €282m if it was put into developing proper broadband services for rural communities rather than a big roundabout. What percentage of people are going to use this junction to get into the city to sit at a keyboard?
Yeah, why not put €282 million into developing broadband in rural Ireland, where it could possibly create a few jobs? Or else put it into a built up city that requires better facilities for its thousands of commuters … Hmmmm what a toughy!
We cut put the 282 million into relocating once off country housing into a more sustainable form so that services could actually be provided in an efficient manner. Or windmills, lots of windmills.
To put the Newlands Cross Scheme into perspective, it will benefit 100,000 people every day for nearly the same price as the Western Rail Corridor which is used by 100,000 people annually. This is capital investment that is worth every cent and has high benefits for many
That’s far too sensible. Remember that the western rail corridor is worth about 100k votes, even if none of the voters ever use it. Won’t be long before the bumpkin politicians complain about Dublin getting all the money when this news gets outs.
rural broadband would be less than 282million to rollout due 2 better technology nowadays!
Have they just given away another toll for 35 years? Have they learned nothing?
Where are you getting 35 years?
Meant 25. bam taking responsibility for 35km stretch of road arklow/gorey bypass. This sounds like a 25 year toll to me. I wonder if its a similar contract to the ones that cost the state so much. Short sighted by government if so.
Yep, for some reason people think BAM will build a road in good faith for the good of the country – they get a loan to build the road and make it back by either tolls or additional taxes over 35 years. This is more ‘long finger’ development that let a minister open a shiny road, but the commuters and tourist will be rueing it for years.
Another big European firm looked after with Irish borrowed money.
Jesus Christ can this government not see what’s happening.
Wool over eyes come to mind.
Just because it’s a PPP does not mean it will be tolled.
Ah lenoard we don’t have big enough companys here to take on the jobs.I worked for them in limerick there a good crowd to work for they pay well and hire huge numbers of men from the areas the jobs are in.all these jobs go out for tender so Irish company’s can apply for it
What that means is that BAM will be responsible for maintaining that stretch rather than Wicklow and Wexford County Councils. It doesn’t mean a toll, unless the Government decides to toll it as a revenue generating exercise (separate from the PPP)
About bleeding time,
Has anybody calculated how much of a fuel &CO2 saving will happen from building the Newlands Cross upgrade? Think about no longer having to sit in traffic for 20 or so minutes with the engine ticking over, it has got to be a lot. Bet the NRA did not or could not calculate this.
Misleading headline – the created jobs are not permanent
waste of money. should invest in public transport instead instead of failing fossil fuel infrastructure
They have learnt nothing
@one-off
‘Permanent’? Who said they would be permanent ?
The idea of a permanent job is thankfully disappearing fast even in the public services.
Employment is mobile.
in focusing on the article – public transport could offer no alternative for a flyover at Newlands X. It is a no-brainer decision and should have happened when the Red Cow debacle was resolved
It is temporary work, but any work is good news. BAM are a very big company, and will outsource a lot of this work – the majority of the €232 million will not even touch irish bank accounts, never mind the coffers.
Not too sure of the red thumbs for the suggestion, all public transport is in general ‘ppp’ as it always generates income, and i would rather be sitting on a 30 minute decent commuter train than 2 hours in traffic.
Its not a no brainer – spending money on roads is daft and takes away from other transport modes where we should concentrate resources. Current government policy is to radically reduce car trips http://www.smartertravel.ie/ not to make it more convenient for people to drive
Motorways are essential to economic activity.. these are relatively small upgrades to an incomplete network, imagine the cost of upgrading the Dublin Wexford rail line which currently takes the better part of 3 hours to travel, and don’t forget our trains are diesel electric so no point on being on an environmental high horse. Roads and reduced travel times help enhance economic activity and reduce costs of goods/services.
Traffic light free junction? Looks like a load of traffic lights in that image.
Peter
No traffic lights for traffic going straight through the junction and staying on the N7.
Traffic heading to / from Tallaght & Clondalkin, (turning on/off the N7) there will be traffic lights.
So basically 80-90% of the traffic using the junction will be not be stopped for traffic lights.
Pity you have only shown one picture !! Wold of loved to have seen all the junctions from different angles ..
Have a look here: http://www.skyscrapercity.com/showthread.php?t=1599158 Plenty of illustrations.
Thanks Brian.
Thanks for the link, Brian. I live just beside Newlands, this will be a bit of disruption while being built but will be great when finished. Apparently it’s the busiest junction in the country. I can well believe it having to sit there waiting for my turn to go at least twice a day.
How long before someone other than me mentions Metro North….The northside shoppers train
They should borrow the money from E.I.B to build metro north and Dart underground. It will create over 20,000 jobs.
How many times will the newlands cross project be announced by this government? I see they recently announced tbe joining of the 2 luas lines for the umpteenth time!
The way I read it people around Gorey /Arklow will be paying a toll on it for 25 years.
Also the people of Ireland will be forking out money to BAM when the (probably unrealistic ) usage per year isn’t met.
That’s only the way it seems to me
your probably right as that is what currently happens on other toll roads.
There will be no tolls on this road so locals need not worry
How do you know?
I read the contract online, also reported as such on rte.ie
Bout time they sorted out newlands cross. Pity they didn’t do it 20 years ago. Will pay for itself in 3 years – increased productivity, etc
N25 not M25. The waterford bypass isn’t a motorway.
i’m indifferent. one thing I know it will cost significantly more than stated ,probably will cause mayhem when it opened and a miniscule amount of jobs will be created.
Typical uninformed moaning comment without any basis in fact. Practically every road project since 2005 has come in under budget and ahead of schedule because of the contract type signed.
I’ll tell you what, let’s close down all those road and go back to carts and horses. Perhaps you’d prefer that.
It’ll probably cast a billion, the 282 million is probably the consultant fees
For all the families who have lost a loved one on the lethal stretch of road between rat new and arklow it is surely to be welcomed. Far to many people seriously hurt or killed over the years. Delighted at this announcement.
Will the new road between Arklow and Ashford bypasses be a Moterway? Talk of N11 rather than M11 is not very promising
It’ll be motorway when it opens. It’s being built to same road spec, and will be designated as a motorway before it opens. The NRA will seek the redesignation under the Roads Act 2007, as it has done for other schemes.
They said on the news/radio that they won’t be putting tolls on the roads . What about gort to Galway motorway anyone know when that will be done so close to being finished but yet so far away .
According to DTTAS website construction will start by the end if this year, European Bank have agreed in principle to funding for same
So many positive people on here
More tolls?
Read the other comments? NO tolls
have your say