The Irish Banking Federation (IBF) has rejected claims that banks are not lending to businesses.
The federation said it "seriously questions the representativeness and accuracy" of new research undertaken by Isme among its members.
Isme's new survey, which was published this morning, reveals that 55 per cent of firms who applied for funding in the last three months, were refused credit by their bank. This compares to a similar figure in March and to 42 per cent in October 2009.
The survey also reveals that as many as 82 per cent of firms believe that banks are making it more difficult for companies to access finance. This is up two per cent from March.
Almost a quarter of respondents to Isme's survey said it had been suggested to them that family homes could be be put up as collateral for business loans, with 12 per cent of respondents claiming that banks had put forward such an idea.
Isme today called on the Government to extend the remit of the Commission of Investigation into the banking crisis to allow the Central Bank investigate the processes and procedures of SME bank lending.
“The Isme Bank Watch survey results confirm that the banks don’t give a hoot about the rest of the economy and are only concerned about saving their own hides. It is now even more apparent that senior bankers see the government as a ‘soft touch’ who will bail them out when required," said said the organisation's chief executive Mark Fielding.
"The State, as the major shareholder, must insist on a return to ‘normal economic lending’ to business and must monitor this through proper, honest statistics and returns to the Central Bank," he added.
The Irish Banking Federation (IBF) questioned the validity of Isme's survey and said the only reliable study into bank lending was the one published by Mazars in April.
That study, which includes data from AIB, Bank of Ireland, Ulster Bank, Anglo Irish Bank and National Irish Bank, showed that eight out of ten credit applications were approved, bringing total credit outstanding to the SME sector to €32.2 billion. The Mazars results also show that around one-third of all SME loans are currently in the watchlist/impaired category – a key factor in accounting for strains in the supply of credit to SMEs.
“ At a time when the IBF, our member banks and the other SME business representative bodies continue to work with Government and all relevant stakeholders to provide the support that sustainable businesses need, it is particularly unhelpful that Isme produces misrepresentative information like this which does little or nothing to promote confidence,” said the federation's chief executive Pat Farrell.
In March, Minister for Finance Brian Lenihan said the country's main banks, AIB and Bank of Ireland, would have to make available a minimum of €3 billion each in new increased credit facilities to SMEs this year and next as part of a package of State support for the banks.
Meanwhile, Minister for Enterprise Batt O’Keeffe is set to seek cabinet approval for a State-backed loan guarantee scheme for small businesses - that is in addition to the sums pledged by AIB and Bank of Ireland - before the Dáil’s summer recess next month.
