THE LABOUR leader demanded that the Taoiseach call in the banks, claiming that they were “squeezing the life” out of many businesses and putting jobs at risk.
Eamon Gilmore said that when the Irish economy was booming, the banks were in the driving seat, and one could get a loan for anything. “I am hearing from businesses, big and small, that when loan review dates come up, the banks are in to reduce the facility, change the terms, add on extra charges and increase interest rates without waiting for the changes made by the European Central Bank,” he added.
“Businesses starting up anew, which are expanding, find that, in effect, the banks are now closed for new business.”
Mr Gilmore said he did not expect the banks to act in a way that was not commercial or not responsible to their shareholders.
“However, they could apply their credit policies in a more measured and sensitive way in the new circumstances in which we find ourselves,” he added.
“I would have thought it must be in the banks’ own long-term interest to ensure the Irish economy gets through the more difficult times it is now in.” He said the banks needed to look at the wider picture rather than just their own quarterly returns.
The Taoiseach, he said, had been good to the banks, abolishing the levy, worth about €103 million annually, in 2005.
Taoiseach Brian Cowen said he agreed it was important that the banks continued to provide “prudent risk to business” and that the performance of Irish business during the good times should stand as a strong criterion for continued support for those businesses that continued to invest and required access to finance.
It was true, he added, that there had been difficulty regarding inter-bank lending.
“The provision of money supply has been an issue in international banking circles for over nine months and the provision of money beyond 30, 60 and 90 days has not been as plentiful as would have been the case in the past,” said Mr Cowen.
“This is as a result of the lack of trust that has emerged due to the outcome in the United States of the developments in the subprime market there and the ripple effect this has had on wider banking circles. “
It was important to point out, said Mr Cowen, that, as the Central Bank had confirmed, the Irish banking system was well capitalised and was in a healthy state in terms of its own financial situation.
Mr Gilmore said he did not think that the banks could hide behind the international credit squeeze any more than the Taoiseach could hide behind the global economic environment.
