ULSTER BANK, the third largest bank operating in Ireland, has said it is willing to lend more than €1 billion to small- and medium-sized enterprises in each of the next two years but does not expect demand to exceed this level.

In a public statement of the bank’s commitment to Irish SMEs, the UK-owned lender said it would not reduce overdrafts or convert them to term loans if customers met their terms and conditions.

Where Ulster Bank previously offered free transactional banking services to start-up companies in the first two years on a case-by-base basis, the bank is now offering this to all start-up firms.

Declan Fitzgerald, head of business banking at Ulster Bank, said the amount the bank was willing to lend to SMEs was “a function of demand” rather than on the amount of credit available.

“We have €1 billion-plus available in each of the next two years but there is more available if the demand is there.”

He said Ulster Bank approved credit of €700 million to SMEs in the first half of the year, but just half of this was drawn down.

Asked if the bank’s lending criteria had become more stringent, Mr Fitzgerald said the bank was now seeking more financial details from SME customers.

“The detail that is required and demanded in business plans has increased,” he said, but noted that business plans submitted by SMEs had been “light” in recent years.

Ulster Bank has €5.8 billion in outstanding loans to 100,000 SMEs. The three big Irish banks cover about 80 per cent of loans to Irish SMEs.

Mr Fitzgerald said the bank had previously held a 16 per cent share of this market but it was now accounting for up to 23 per cent of new loans to small businesses.