Following the publication of the Central Bank’s quarterly bulletin, local TD Frank Feighan warned that Irish banks are still being propped up by the European Central Bank.
“Despite extraordinary levels of support from the European Central Bank, Irish banks continued to tighten the screw on Irish borrowers in 2009, with outstanding loans to the private sector declining by 5.3 percent in the year to November.
“The huge uncertainty surrounding the NAMA valuations is clearly making Irish banks reluctant to lend. Eighteen months into the financial crisis there remains little end in sight to the credit crunch that is destroying thousands of jobs every month among small Irish businesses.
“The Central Bank report confirms that at the end of 2009, Irish banks remained on life support from the European Central Bank, with lending to Irish banks increasing to €92 billion in December. This indicates that NAMA has had no material impact on market confidence in Irish banks.
“Without the generous and extraordinary support of the ECB, both our banks and probably our Government would have run out of money last year. But this arrangement cannot last, as the ECB has already warned Ireland that its emergency supports to Irish banks must be phased out over the coming 12 months.
“There are signs that the merits of the Fine Gael approach to the banking crisis are at last being recognised, even in Government circles, with indications that Fianna Fáil is at last considering a bad bank to wind down Anglo Irish Bank. The Government also seems to be implementing targeted initiatives to get credit flowing in key sectors, which Fine Gael believes could best be delivered by a National Recovery Bank. Perhaps the penny is at last dropping with the Government,” concluded Deputy Feighan.
