Northern Ireland

Sammy Wilson: NI bank lending 'a guessing game' due to lack of data

Sammy Wilson
Image caption Sammy Wilson said he did not have the power to compel banks to provide regional lending data

The finance minister has said there is a "guessing game" over the current state of Northern Ireland's banking sector due to a lack of lending data.

Sammy Wilson said the banking industry has refused his request for detailed public information on the rates and terms of their loans to NI businesses.

He claimed national schemes to promote UK bank lending had not worked in NI.

He said NI had "unique challenges" and needed a "tailored" regional response to help the local economy to recover.

The minister made the comments in an address to the Stormont Assembly on Tuesday, as he updated MLAs on the progress of the new Funding for Lending scheme, launched by the Westminster government on 1 August.

'Frustrated'

Mr Wilson said that for the past three years, he has been concerned about how the availability of credit "at reasonable terms" was affecting Northern Ireland's economic recovery.

He said he has held several meetings with the Treasury about business lending but was becoming "increasingly frustrated" at the "lack of attention" to regional banking difficulties.

"Our issues are greater and more complex than other parts of the UK," he told MLAs.

The minister argued that bank lending was particularly constrained in Northern Ireland due to the severity of the property crash and the involvement of the Republic's National Asset Management Agency (NAMA), which controls properties loans worth billions north of the border.

He also said the fact that many of NI's major banks are under foreign ownership further complicated matters, as they were subject to the demands of parent companies outside UK.

90% approval

Mr Wilson revealed that after negotiations with the banking industry and the British Bankers Association (BBA), he had been supplied with limited quarterly data on NI business lending rates - on a confidential basis - dating from July 2010 to June 2012.

The data showed that:

  • lending has "fallen steadily over the period" but is now "fairly stable"
  • borrowing applications have fallen, reflecting "subdued demand"
  • loan approval rates "remain at 90%"

However, Mr Wilson pointed out that the approval rates included "the partial approval of loans at perhaps a lower level than was originally requested".

He added that separate surveys carried out by the Department of Finance and Personnel (DFP) had indicated that the loan approval rate was "much lower".

Refused

The minister told MLAs that although it was probable that businesses were postponing investment due to economic uncertainty, he also had "no doubt that the cost and conditions that are now attached to credit are also factors which may be dampening that very demand".

He said he had asked for more details on the rates and terms of the approved loans but this request had been refused.

"Unfortunately however, given the high level nature of the BBA data, and the lack of information around cost and conditions, it's impossible to get a clear sense of the scale or nature of the problem here and greater transparency is required by the banks."

"The fact that banking matters are not devolved limits my effectiveness in this regard, as the executive does not have the power to require banks to supply information and it has led to a guessing game over the current state of our banking sector," the minister said.

However, he added that he had made "some progress" with the Treasury negotiations as they had agreed to monitor the new Funding for Lending scheme on a regional basis.

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