Plans to ensure credit flow well advanced - Cowen

TAOISEACH Brian Coweninsisted that the Government was "at an advanced stage" in looking at options to ensure small businesses had access to credit as he came under renewed Opposition pressure in the Dáil about investing in the banks.

Fine Gael leader Enda Kennysaid that 10,000 jobs a month were being lost. "The small business sector is now in crisis because they are unable to get credit," he said. The sector faced "an absolute jobs decimation" unless the Government acted quickly.

Labour leader Eamon Gilmoresaid: "There's a famine in this country, a credit famine. Businesses are being starved of credit. The Small Firms' Association said many small businesses have experienced their worst month of trading for 20 years and they went on to say that unless specific actions are taken in a matter of days the small business sector will implode and unemployment will soar."

Mr Cowen stressed, however, that "we are at an advanced stage on a whole range of issues that I cannot discuss this evening but which will ensure that we ensure that the stability of the banking system is there in the future".

During Leaders' Questions he said that the regulator had kept the Government briefed and the Central Bank governor was meeting the Minister for Finance to outline the full view of the situation following completion of the PricewaterhouseCoopers' report into the banks.

"We do have in our banking system no question of impending insolvency, despite comments to the contrary," he stressed, adding that the banks were preparing business plans for capitalisation.

But he added: "There's not just one option, there are a number of options, and I want to make that very clear. I also want to make it clear that capitalisation on its own does not guarantee the access to credit that we want to see for Irish business."

He pointed out that "if you double the share of Bank of Ireland tomorrow that doesn't double its capital" in a reference to that bank's share price falling below €1 on Monday.

As the fall in share values continued, calls for bank capitalisation had increased, and Mr Kenny said there would be an "implosion in the next six months" unless the Government acted to allow credit lines to flow through the financial system.

The Taoiseach insisted that "this Government will take whatever decisions are necessary in the national interest in light of the most up-to-date analysis and up-to-date information because, remember, markets act on a herd instinct that is not always on full information".

Mr Gilmore pointed to the €15 billion fund established by the European Investment Bank and said that banks in 22 of the EU's 27 states had applied for and had obtained funding to help the small business sectors. However, "the fully state-guaranteed banks in this State have not applied at all".