BANK FINANCE is underutilised by Irish third-level institutions as a funding source, the head of education banking at Barclays has said.

Chris Hearn was speaking ahead of meetings in Dublin yesterday with representatives from Trinity College Dublin, UCD and the Irish Universities Association (IUA) about the possible provision of bank debt facilities to third-level institutions in Ireland.

Last year Barclays completed an €11 million term loan agreement with UCC, the only academic institution in the Republic with which it deals. It also provides finance to Queen’s University Belfast.

According to the most recent figures available from the IUA, total bank debt across the third-level sector in Ireland in 2007 was in the region of €200 million.

This compares to approximately £3.8 billion (€4.4 billion) in Britain.

A spokesman for the IUA said that while the level of debt may appear comparatively small, it was important to be aware of differences in the funding environment between Ireland and other countries.

However, he added that, in the context of the difficult funding environment, there was a need for universities to expand their sources of funding, including bank borrowing, although the need to secure a revenue stream to service any resulting debt was crucial.

According to Mr Hearn, universities in Britain and Ireland are increasingly looking to private sources of funding as traditional streams of revenue dry up.

“Traditionally the financing model of the typical university was based on four main income streams: state funding, fees from foreign students, donations and philanthropy, and research. With budget cuts and donors feeling the squeeze, these previously guaranteed lines of finance have dried up and universities need to look at other ways of raising funds.”

Last month Cambridge University announced it was following the Ivy League trend and issuing its first bond issue, hoping to raise up to £400 million.