Bank of Ireland is prepared to consider different models of facilitating investment in the construction sector, chief executive Richie Boucher said yesterday.

Speaking before the Oireachtas Joint Committee on Jobs, Enterprise and Innovation, Mr Boucher said the bank had an appetite for lending to the construction sector, but an issue was the level of equity a developer could put into a scheme.

As such, Mr Boucher said the bank was prepared to look at “different models” for funding property development.

"We see opportunities in construction and we would like to look at that."

Loan applications
In a presentation focused on access to finance for SMEs, Mr Boucher said Bank of Ireland had an approval rate of 85 per cent, and was receiving about 1,000 loan applications a week, with funds of € 12 billion to lend to SMEs over the next three years.

“We don’t make money until we lend money,” said Mr Boucher.

When questioned as to whether SMEs were afraid to approach a bank and ask for credit, Mr Boucher said: “I’ve met few successful people who are afraid to ask for something.”

Bernard Byrne, director of personal business and corporate banking, stepped in for AIB chief executive David Duffy, who was away travelling on business.

He told the committee the bank’s SME loan approval rate was 92 per cent.

"We have plenty of capacity to lend from a liquidity point of view. We have no intrinsic motivation to do anything other than lend."

Restructures
Mr Byrne said the bank had about 9,000 SME customers with some €15 billion in impaired loans, but the bank was "on course to complete the substantial majority of SME restructures in the next year".

“We are prepared to compromise and write down debt,” Mr Byrne added, but did not disclose how extensive this was.

When questioned on the use of personal guarantees in SME lending, Mr Byrne said they were "still a feature of the Irish market", and allow borrowers to do things they may not otherwise be able to do in the absence of equity.

'Vital role'
Jim Brown, chief executive of the Ulster Bank group, said the bank expected to return to profitability this year, and that SMEs would play a "vital role" in its recovery.

The bank had set aside €1.2 billion for SME lending this year, two-thirds of which it would lend in the South and one third in the North.

According to Mr Brown, the bank, which does not participate in the Credit Review Office, had an SME loan approval rate of 94 per cent, and about a third of loans that got appealed were then approved.

He said the bank had written off debt, but that he had no statistics on how much.

The bank had put "a relatively small number" of companies, at 31, into receivership.

Gradual upturn
All banks pointed to a gradual upturn in the economy, with Mr Byrne saying that 2014 would mark a turning point for SMEs "as consumer sentiment improves to a point not seen since before the economic crisis, coupled with a year-on-year fall in unemployment".

Ulster Bank said lending in the first quarter of 2014 was almost three times what it was in 2013, and there was generally a much bigger uptake in drawdown of loans.

Mr Boucher said the bank had noted “significant growth in agri-food”, with a strong start noted in other sectors such as motors.

“We’re seeing a lot of opportunity in the market place as confidence is slowly starting to come back.”