The Central Bank has published a new set of regulations around lending to the small and medium sized business sector. The regulations aim to inject greater transparency into the lending process, including a stipulation that lenders must give reasons as to why an applicant's request for a loan has been rejected.
Mark Fielding, CEO of the SME representative group, ISME, has welcomed the new regulations. "Up to now, SMEs have just been getting a blanket rejection. Banks must now be specific. This allows firms to go back and rejig the numbers and find out what they can change in order to access finance," he said.
Mr Fielding said access to finance was still a big issue for SMEs, eclipsed only in recent times by concerns around political uncertainty in the lead into an election. He also welcomed a provision whereby banks would have to contact a business customer who is 15 days in arrears to find out why they are behind in their payments and if they are aware of the arrears situation.
"Another welcome development is that banks would have to warn guarantors if a business they'd backed got into trouble. Up to now, they'd been left out of the loop. The first time they would have known it was when collateral was being realised and you were being called in to pay up," he explained. He said the new rules would apply to all credit institutions, including the credit unions who would be brought in at the end of next year.
Mark Fielding said SMEs were beginning to feel optimistic about the future once again "They wouldn't be rushing out to buy the yacht yet! However, we would be expecting to see a 2.5-3% increase in retail sales which will go through into distribution and manufacturing," he concluded.
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MORNING BRIEFS - Average house prices in Dublin city and county fell by over 6% in 2015, according to a national survey by Real Estate Alliance. A combination of lack of suitable supply, high rents and the Central Bank's lending rules are believed to be behind a stagnation in the capital's market. The average house in Dublin city and county now costs €332,000, down €21,500 on last December's price.
*** New planning guidelines governing the construction of apartments are expected to be published by the Environment Minister today. The construction industry claims the current guidelines make it prohibitive for firms to build apartments due to the high costs. It is believed these new measures will cut the cost of building a single unit by up to €20,000 as there will be a reduction in the number of elevators and car parking spaces required in a development. There will also be a reduction in the minimum size of an apartment. Some claim the new measures will encourage a race to the bottom in standards, but that has been rejected by the industry and the department.
*** Paddy Power shareholders will be asked to vote today on the company's merger with Betfair. The deal, which was announced some months ago, was given the go-ahead by competition regulators late last week. If shareholders give it their blessing, it will create the world's biggest betting firm. Given the way the share price has gone over the past while, it would be a huge surprise if the deal did not get over the line. Paddy Power shares have been trading at over €120 in the past week.
*** Irish salaries are forecast to rise by over 2% in 2016, according to a survey of companies by consultants Mercer. They surveyed 135 organisations and 97% said they were planning pay hikes in the next year. Firms in the life sciences, hi tech and services industries are forecasting the largest increases of between 2.5% and nearly 3%.
As well as pay, some firms are attracting and retaining staff with benefits including pensions, health insurance, flexible working hours.
*** Irish wholesale gas prices were down by over a quarter in the month of December compared to the same month least year, reflecting the continued fall in energy and commodity prices. According to Vayu Energy, strong supplies, mild weather and a positive storage outlook were the main factors behind the fall in prices. A drop in the value of the euro against sterling masked an even bigger drop in prices on the UK wholesale market, where Ireland buys its natural gas. In sterling terms prices are down by a third, hitting levels not seen in over five years.
