Competition urgently needed in banking market, says Isme chief

Ireland must create an environment that facilitates and fosters enterprise, not just in the multinational space, but also for small and medium-sized enterprises, Isme chief executive Eamonn Kielty has said.

Speaking at the Isme annual conference in Dublin, Mr Kielty repeated the organisation’s long-standing call for a development fund for the SME sector, saying it would bring some competition into the dangerously concentrated market.

“A normal competitive banking market no longer exists in Ireland, and currently the banks are primarily concerned with self-preservation and deleveraging. As foreign banks exit stage left, the remaining bailed-out two will no doubt take advantage of the lack of competition to hike up their charges.”

He said the resilience and determination of SMEs is starting to win through, despite the harsh economic headwinds.

However, he warned against any premature celebration as Ireland exits the troika bailout, and called for innovative initiatives in public sector costs, bank lending and public procurement.

Access to credit
Economist Tom Healy supported calls for a strategic investment bank to help small firms, saying access to credit continued to be a huge problem for SMEs.

“We need to leave casino banking to somewhere else outside businesses and households . . . Fixing the banking sector will probably remain the most significant challenge post-troika,” he said.

Mr Healy, a director of the Nevin Economic Research Institute, said Ireland could ill-afford to deplete human capital in the long run by not paying attention to skills, adding that the country would not be "out of the woods" post-troika.

“We are being moved from intensive care to an ordinary ward where staff are going to continue monitoring our health.”

Prof John McHale, chairman of the Irish Fiscal Advisory Council, said Ireland's debt ratio would have reached almost 160 per cent of GDP, had fiscal adjustments not taken place.

“There is no doubt that austerity slows the economy. The key question is whether austerity is working to stabilise public finances,” he said.

Luke Halpin, a sales executive with Surfaccounts, said the mood was on the up for SMEs, with people showing more confidence in the economy.

“We hired six new people this year, so things are looking up.”

Anglo Printers director Peter Kieran said he had also noticed an increase in consumer and business sentiment in the past six months.

“We are in sales and are out on the road an awful lot. We see people are spending more money now.”