The new Strategic Bank, SBCI, will be a different beast. It will act as an intermediary between its capital providers, including the German State bank, KfW, the European Investment Bank, and our own Irish Strategic Investment Fund. Its goal will be to provide loans at below prevailing commercial rates to SMEs.
Finance Minister Michael Noonan has indicated that he expects that the SBCI will have a balance sheet of around €5bn after five years.
The pillar banks, in particular, will have a large pool of funds from which to draw. Small firm organisations will be pressing to ensure that these low interest funds reach the intended targets and are not siphoned off elsewhere.
According to Dermot O’Leary of Goodbody Stockbrokers, “the banks will be used as a distribution platform for these cheaper funds and must prove that the funds are solely used to lend to SMEs. The Government hopes that the SBCI (strategic bank) will lower barriers to entry to the market.”