Strategic Banking Corporation of Ireland secures €800m in funding for Irish SMEs
Issued 31 October 2014
The Minister for Finance Michael Noonan T.D and the Minister for Public Expenditure and Reform Brendan Howlin T.D along with The German Finance Minister Wolfgang Schäuble, along with President of the EIB Werner Hoyer, Dr Ulrich Schroder CEO of the KfW and Chief Executive of the NTMA John Corrigan met in Dublin today (31 October) to formalise the release of €800m in funding to the Strategic Banking Corporation of Ireland (SBCI). The SBCI is a state owned banking corporation which will provide tailored loans for SMEs.
The SBCI paves the way for Irish SMEs to begin the process of accessing new innovative financial products. It is envisaged that the first loans will be available to SMEs the end of 2014.
Speaking ahead of the signing ceremony Minister Noonan stated:
“Following our successful exit from the EU/IMF Programme last November agreement was reached between the Taoiseach and the German Chancellor that Ireland would establish a state owned source of funding similar to the German Development Bank KfW. Since then officials from the Department of Finance have been working closely with the German Finance Ministry, the German Development Bank KfW, along with European Investment Bank and the NTMA on establishing the Strategic Banking Corporation. An initial €800m in funding has now been secured. I expect that SME’s will be able to access these funds at competitive rates and through innovative products by year end.
We have big plans for the SBCI and it will be a key source of funding to SMEs for years to come. The legislation which established the SBCI allows for up to €5 bn to be made available to SMEs over the next five years. Existing institutions will be used as on lenders of the SBCI funds. This new source of competitive and innovative funding will support SME’s to grow and invest and create jobs”.
In welcoming the significant signing ceremony Minister Howlin stated:
“We committed in the Programme for Government to supporting SMEs. Today’s event is a watershed moment. The SBCI will be a central tool supporting innovative Irish firms and allowing greater access to finance for Irish small and medium sized businesses.”
The SBCI is designed to access lower cost funding and pass on these lower costs directly to SMEs. The new initiative also has a mandate to increase the number of finance providers to SMEs and create competition. The SBCI will use established institutions as on-lenders and thus provide funding more quickly and efficiently than if it established its own direct lending organisation. This model of lending is in line with international best practice for State promotional entities.