The Credit Review Office, which was set up to provide SMEs with an independent opinion on refused credit applications, has published its seventh report. This report proposes a system to assist borrowers in the credit application process.
Credit Reviewer John Trethowan says that of the cases considered by the Credit Review Office, the decision of banks not to lend or withdraw facilities has been reversed in 54% of cases.
''This is a good overturn rate, bearing in mind that all applications have been reviewed at a senior level in the banks before the Credit Review Office became involved,'' he stated.
Mr Trethowan said that AIB and Bank of Ireland have both achieved their €3 billion loan targets. He said that after ''robust meetings'' between himself, the two banks and the Department of Finance, lending activity increased in the last two quarters of 2011 to achieve the annual targets.
Mr Trethowan also stressed that banks can only lend when they receive a credit request and he added that too many people and businesses are asserting the banks are not lending when a firm has actually not even applied for a loan over the past number of years.
He said that since his last report, four banks - AIB, Bank of Ireland, KBC Bank Ireland and Ulster Bank - have now adopted a common format application for credit for SMEs and farmers. He added that work is now underway, led by the Irish Banking Federation, to engage with accountancy bodies to agree a number of steps to assist SMEs and farmers through the credit application process.
Issues being addressed include the agreed definition of ''viability'' and a standard recognised format for cashflow planning, costs for accountancy services, and the costs of preparing a business plan.
Central Bank figures show another fall in lending
Figures from the Central Bank show slightly bigger falls in lending to businesses and consumers last month compared with December.
The bank said loans to households were down 3.9% compared with January last year. The annual fall in December was 3.8%. Mortgage lending was down 2.4% over 12 months, while lending for other purposes fell by 8.2%. During January, lending to households dropped by €690m.
Lending to businesses last month was down 2.2% from a year earlier, compared with a 1.6% annual fall in December.
Business loans with terms of between one and five years are showing the biggest falls, according to the Central Bank. But the bank said loans of more than five years were up 0.2% compared with a year earlier - the first annual rise in almost three years. Short-term loans of less than one year have also been rising in recent months.
The Central Bank figures also show that private sector deposits - deposits from households, businesses, financial institutions and pension funds - fell by almost €500m during January, mainly due to a drop in deposits from businesses. Household deposits also fell back slightly after a rise in December.
The annual rate of decline in January, however, slowed to 7% from December's 7.3%.
Separate figures from the Department of Finance show that deposits at the banks covered by the guarantee scheme - AIB/EBS, Bank of Ireland, IBRC and Permanent TSB - were €147 billion in January, up slightly from December.
The amount on deposit was unchanged when account was taken of the transfer of Northern Rock's Irish deposits by Permanent TSB during the month.
The department said banks had lowered rates paid on deposit accounts since the end of the year which, together with seasonal weakness in retail balances, may have some effect on future figures. It points out that its figure are compiled in a different way from the Central Bank's.
Meanwhile, the amount which has been borrowed by financial institutions from the Central Bank as part of the euro system fell by €13.5 billion during January to €94.9 billion. The Central Bank said this was mainly due to IFSC banks using ECB refinancing operations.
The domestic banks accounted for €71.3 billion of this, down €734m from December.
