Belfast Telegraph

Banks 'may be hindering recovery'

Banks may be hampering economic recovery in Northern Ireland, MPs have warned.

Poor customer service, IT systems which are not fit for purpose, and conservative lending criteria are doing little to tackle the current financial difficulties, according to a new report by the Northern Ireland Affairs committee.

Laurence Robertson, who chairs the Westminster select committee, said: "The banks have assured us they are "open for business". I t is essential that they now put their money where their mouth is to help small businesses play their part in Northern Ireland's economic recovery.

"We also believe that at the level of customer service and IT services need to improve considerably for banks themselves to really play their part."

MPs have been examining banking structures, governance, access to finance and the effectiveness of national initiatives to aid economic recovery since for almost two years.

In a report, published today, they called for greater investment in technology after two major IT failures at Ulster Bank left customers unable to access accounts in June 2012 and December 2013.

"With a turnaround in the situations of all Northern Ireland's banks, whereby they have now returned to profit, we believe that some of those profits should be used to update their IT systems, thereby benefiting their customers," the report said.

Concerns were also raised about the closure of dozens of local branches. Although the committee acknowledged some decisions to shut smaller branches were down to reduced customer activity and greater use of internet banking, they concluded that the move was not always appropriate for rural areas.

Meanwhile, it was claimed conservative lending criteria could be hampering economic growth by deterring some businesses from chasing opportunities requiring additional finances.

The report added: "Banks have appeared reluctant to lend other than to the most financially robust customers.

"Recent statistics show a slight improvement in borrowing by SMEs (small and medium enterprises) during 2014, but the committee believes that the more conservative lending criteria have dissuaded many businesses from pursuing opportunities that would require bank financing."

Although there were reservations about the recent sale of NAMA and the Ulster Bank property loan books the committee called for the banks to capitalise on the positive signs of recovery.

MPs also appealed for the Northern Ireland Executive to "keep a close eye" on the relationship between Cerberus, the partial successor to NAMA, and businesses in Northern Ireland and said there should be greater transparency across the whole banking sector.

Mr Roberston added: "From the reckless high-risk attitude of many banks pre-financial crisis, the pendulum appears to have swung too far back in the opposite direction.

"Over the past year, the Northern Ireland economy has shown very welcome signs of recovery, with many new jobs recently being announced and the banks themselves showing a return to profitability.

"The banks needs to build on this.

"It is regrettable that banks such as FTB and Danske, have chosen not to participate in HM Government's Funding for Lending Scheme, thereby potentially denying Northern Ireland further capacity for growth."

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