Ongoing struggle to get credit flowing, says Tánaiste

TÁNAISTE MARY Coughlan has described as an “ongoing difficulty and struggle” efforts to get credit flowing in banks again, but she said “measures are being taken to address those concerns”.

The Minister for Enterprise, Trade and Employment also expressed her disappointment at the decision by employers’ group Ibec to withdraw from the current national pay agreement.

She told the Dáil “the agreement contained robust inability to pay mechanisms, specifically designed to address the current economic realities”.

Fine Gael leader Enda Kenny had referred to comments by AIB chief executive Eugene Sheehy at the Dáil finance committee when he confirmed “that when the Nama bonds are received by his bank, the money will not be allowed to flow for credit”.

Mr Kenny said that during the debate on the legislation to establish the National Asset Management Agency (Nama) “we were told on umpteen occasions by the members of the Government that the impact of Nama would be to free up credit and have credit flow at competitive rates for business”.

The State owned 26 per cent of AIB and Brian Lenihan said “he is entitled under the law to force banks to allow credit to flow at competitive rates”.

But in the light of the banker’s comments, the Fine Gael leader asked what happened to the repeated promises by the Minister for Finance that when Nama was passed “more credit would flow at cheaper rates. I met people yesterday who went to their bank managers with a view to putting up their own money in seeking loans to develop businesses and they were told bluntly by them that they would not even lodge the application for them. This is scandalous.”

Ms Coughlan said “the preferred option is to go initially to the international markets and, following the enactment of the Nama legislation which removes uncertainty in the banking sector, state where we want to be, which is in the international markets and lending to business”.

She insisted that “the Nama legislation gives the Minister for Finance powers to issue guidelines on lending and to set up an arbitration mechanism to deal with disputes regarding the availability of credit”. It was a “matter for ongoing discussion” and while “it is an ongoing difficulty and struggle”, measures were being taken to address those concerns.

Raising the withdrawal of Ibec from the national pay agreement and the threat to withdraw altogether from social partnership unless agreement is reached with the unions by mid-December, Labour leader Eamon Gilmore said the action and timing were “provocative and unhelpful”.

He asked “where does this leave those public service bodies which are members of Ibec and are, apparently, parties to the talks between the public service unions and the Government”.

Ms Coughlan, who was not informed by Ibec of their decision, said their action was “disappointing. It is disappointing that this has happened and I am sure we will have further discussions about this issue in due course”. She also stressed the “robust inability to pay mechanisms”.