SME Business Guide
The Irish Banking and Alternative Lending Sectors: A Timeline of Key Events 2009 - 2023
Prior to the Global Financial Crisis there were nine banks operating in the Irish banking sector: Bank of Ireland, AIB, KBC, Ulster Bank, Bank of Scotland, Irish Nationwide, Danske Bank, Anglo Irish Bank and ACC Bank. In 2024, only three banks remain.
The Irish Government nationalises Anglo Irish Bank. The company’s stock is delisted from the Irish and London Stock Exchange. The bank receives a €29.3 billion bailout and over half of its loan book is acquired by NAMA. Prior to the bank’s collapse, Anglo Irish Bank was the third biggest bank in Ireland, behind Bank of Ireland and AIB.
Total bank credit outstanding to Irish SMEs at end Q1 2010 is €67.3 billion. Total credit outstanding to non-financial and non property related SMEs (or ‘core’ SMEs) is €32.5 billion. Total SME lending over the past six months decreased by 5.1% (4.5% decline for core SMEs).
Bank of Scotland announces it will cease operations in Ireland. The bank, which is owned by Lloyds Banking Group, did not forecast strong growth opportunities in Ireland and subsequently sold its loan book of €33 billion. Bank of Scotland had been operating in Ireland since 1999.
Irish Nationwide Building Society begins closing its 49 branches in Ireland after selling €3.6 billion in deposits to Permanent TSB. In the years leading up to the Global Financial Crisis, Irish Nationwide Building Society accumulated a loan book of €11 billion, with 80% of it attributable to commercial real estate lending. Irish Nationwide had been operating in Ireland since 1873.
Linked Finance completes its first SME loan. Linked Finance was established as a peer to peer alternative lender to address the stressed SME credit market in Ireland.
Danske Bank (formerly National Irish Bank) announces the phased exit of the bank’s retail and business banking operations in Ireland. Danske Bank had accumulated significant losses from loans during the Financial Crisis. Danske Bank contracts Pepper to manage their existing mortgages and loan contracts.
Agricultural Credit Corporation (ACC) Bank, later acquired by Rabobank, also announces it will close all its branches in Ireland. In the years prior to the Financial Crisis, ACC Bank was involved in lending to Irish property developers. The bank accumulated losses of €1.4 billion between 2008 and 2013 on property related loans. ACC Bank was founded in 1927.
The Strategic Banking Corporation of Ireland (SBCI) is established. The aim of the SBCI is to ensure that SMEs in Ireland have access to stable and low cost financing options. Financing to SMEs will be provided through SBCI’s “on lending partners”.
Capitalflow is founded and begins offering equipment and vehicle financing, commercial property loans and cash flow facilities to Irish businesses.
The SBCI announces the Brexit Loan Scheme. This scheme is made available to Irish businesses to support them make the necessary changes to tackle the economic problems caused by Brexit. The scheme is made available to Irish businesses through AIB, Bank of Ireland and Ulster Bank.
The SBCI launches the Future Growth Loan Scheme. €300 million is allocated to Irish businesses to avail of low cost financing for capital expenditure and business investment purposes.
In 2019, the SBCI supported €247 million in financing to 2,877 businesses. The average loan size was €86,000. The SBCI has cumulative funding commitments of €1.4 billion at the end of 2019.
The COVID-19 pandemic forces SMEs across Ireland to close. Approximately 56% of SMEs in Ireland reported closing at some point during the year.
The Irish Government launches the COVID-19 Working Capital Loan Scheme and allocates €200 million to support Irish SMEs.
In light of the significant challenges facing Irish SMEs from the COVID-19 pandemic, the Irish Government announces that the Working Capital Loan Scheme will receive an additional €250 million. Moreover, the Future Growth Loan Scheme will receive an additional €200 million.
The Irish Government announces that €250 million will be allocated to the Restart Grant. Under this scheme, qualifying Irish SMEs will be in receipt of between €2,000 and €10,000 to supplement the costs of reopening their business after months of lockdown. To be considered for this grant, qualifying SMEs must have turnover of less than €5 million and have less than 50 employees.
The SBCI announces that the Future Growth Loan Scheme capacity will be expanded by a further €500 million.
The Irish Government establishes the COVID-19 Credit Guarantee Scheme. Under this scheme, €2 billion will be set aside to support SMEs who have been financially impacted by the COVID-19 pandemic. The scheme provides SMEs with access to credit that might not otherwise be available to them. Tánaiste Leo Varadkar announces it “is the largest state guarantee in the history of the state”. Under the scheme, SBCI’s funding partners will receive an 80% state guarantee on the finance transferred to eligible businesses. In addition, SMEs will benefit from discounted interest rates. The scheme is available through three banks, six alternative lenders and 19 credit unions in collaboration with the SBCI.
In 2020, the SBCI supported €836 million in financing to 7,639 businesses. The average loan size was €109,438. The SBCI has cumulative funding commitments of €2.2 billion at the end of 2020.
Nat West announces that it will begin the phased exit of Ulster Bank from the Irish market. Ulster Bank had a loan book value of €20.5 billion. NatWest cited that due to the low interest rate environment, the bank was unable to generate sufficient returns in Ireland.
The Central Bank of Ireland reported that bank lending to Irish SMEs over the past 12 months decreased by 24%, representing the largest annual decline since records began. Gross new lending to “core” SMEs reached its lowest value over a 12 month period since 2016.
KBC Bank announces it will begin its phased exit from the Irish market, reducing the number of retail banks in Ireland to three: Bank of Ireland, AIB and Permanent TSB. Over the following two years, KBC Bank began sellings its performing loans and deposits to Bank of Ireland.
The Government announces it will extend the COVID-19 Credit Guarantee Scheme until the end of 2021. The scheme has been operating for 8 months. From the €2 billion in credit available to Irish SMEs, only €215 million in loans have been distributed. This represents 11% of the total financing available.
Capitalflow is acquired by Bunq, a Dutch neobank, for €141 million. The acquisition is predicted to help Capitalflow grow in scale while also giving them access to more finance at competitive rates.
The Irish Government launches the Brexit Impact Loan Scheme, replacing the existing Brexit Loan Scheme. Similarly, this scheme was designed to support Irish SMEs in light of the challenges caused by Brexit. The scheme closes in December 2022.
In 2021, the SBCI supported €819 million in financing to 10,012 Irish SMEs. The average loan size was €81,834. The SBCI has cumulative funding commitments of €2.8 billion at the end of 2021.
Permanent TSB launches a new €1 billion SME lending fund. The bank aims to triple the size of its existing SME lending business.
The Irish Government further extends the COVID-19 Credit Guarantee Scheme until June 2022.
Bunq, a Dutch online bank, announces that it is entering the Irish market. This follows the company’s acquisition of Capitalflow in July 2021. Bunq is now operating in 30 European markets.
The COVID-19 Credit Guarantee Scheme ends.
As part of Budget 2023, the introduction of the Ukraine Credit Guarantee Scheme and the Temporary Business Energy Support Scheme (TBESS) are announced.
TBESS aims to provide €1.3 billion in support to Irish businesses by covering up to 50% of the increase in electricity costs for businesses. However, over the course of 2023, only €130 million was drawn down to support Irish businesses; in other words, 90% of the value of the scheme has not been used for its intended purpose. The scheme ended in July 2023.
The Ukraine Credit Guarantee Scheme aims to provide €1.2 billion in loans to Irish SMEs who have been impacted by the economic challenges that arose from the conflict in Ukraine. Low cost financing for working capital and medium term investment loans will be offered.
The Irish Government allocates €500 million to the Growth and Sustainability Loan Scheme after completing a deal with the European Investment Fund. The aim of the scheme is to provide discounted loans to farmers, agribusinesses and fishing businesses for the purpose of expanding their business and to invest in sustainable energy. The scheme will be run by the SBCI.
In 2022, the SBCI supported €633 million in financing to 7,019 Irish SMEs through their risk-sharing guarantee schemes. The average loan size was €90,100.
The Future Growth Loan Scheme ends. In total, the scheme delivered €750 million in financing across 3,480 loans to Irish businesses.
Ulster Bank closes all of their existing branches in Ireland. Nat West, Ulster Bank’s parent company, announced in 2021 that it would be withdrawing from the Irish market. Since the announcement, Ulster Bank sold its loan portfolio to other banks and financial institutions. Ulster Bank was operating in Ireland for 187 years.
There are now only three retail banks operating in Ireland. 6 banks have left the Irish market since the Financial Crisis began in 2007/8.
Linked Finance reaches €250 million in lending to Irish SMEs.
Santiago SME Finance launches in September 2023. The new alternative lender offers two loan products: merchant cash advance and term loans.
As part of Budget 2024, several changes are directed at the Irish SME market. The Increased Cost of Business Scheme will support Irish SMEs cope with increasing business costs. Under this scheme, SMEs will receive one-off grants in 2024, corresponding to up to 50% of their commercial rates paid in 2023.
Gross new bank lending to Irish SMEs decreased by €133 million (or 12%) during Q3 of 2023. Moreover, net bank lending to SMEs was negative €136 million, meaning SME loan repayments exceeded new bank lending to SMEs. Total outstanding credit to Irish SMEs on banks’ balance sheets at end Q3 2023 was €18.2 billion.
Finance Ireland announced that it has become the first non-bank lender to join SBCI’s new Growth and Sustainability Loan Scheme. Finance Ireland will now be able to provide unsecured finance, starting at €25,000 with a term of up to 10 years. Finance Ireland is Ireland’s largest non-bank lender.