I want to raise concerns regarding the operation of the Strategic Banking Corporation of Ireland, SBCI, which was set up by the House under the Strategic Banking Corporation of Ireland Act 2014. Under that Act, €1.24 billion was placed with the SBCI to finance enterprises that provide credit to small and medium-sized enterprises. The SBCI raised €1.24 billion, of which €525 million came from the State. By December 2015, €751 million in total had been approved to lenders by the SBCI, of which €675 million was allocated to AIB, Bank of Ireland and Ulster Bank. Only €235 million was drawn down and of that, only €172 million went into the market. Amazingly, the banks managed to retain €63 million, which improved the liquidity of their balance sheets. By the end of 2016, the banks had increased their retention of this fund to €112 million, which again improved the look of their balance sheets. By the end of 2016, 84% of money given out by the SBCI for so-called investment purposes went towards car leasing, hire purchase and property restructuring. This is asset-backed lending as opposed to what it was meant for, which is working capital lending. The purpose of this type of lending was never envisaged by the Act. According to the 2016 published accounts, which cover two years and four months of SBCI operations, 11% went to working capital and €27 million, or 5%, went to clear off the debt in Ireland of three foreign banks, namely, ACC, Danske Bank and Lloyds Bank of Scotland.

Also included in that €27 million was a figure for a further bailout of Anglo Irish Bank and Irish Nationwide Building Society. The main criteria for access to the fund were inconsistent and prohibitive. They set the bar so high that only the banks would be eligible. On closer scrutiny it is now obvious from responses to freedom of information requests that neither the banks nor the five other successful lenders met the qualification criteria as set down by SBCI.

Furthermore, the three main banks did not set up a special purpose vehicle, SPV, or produce projections as per the criteria. This resulted in no transparency as to where the money was going and the purpose for which it was used internally in banks. Apart from the three established banks funded by the SBCI, five other private non-banking companies were successful in securing SBCI funds. Of these five, four are only involved in leasing and property finance, and not working capital. Coincidentally two of the new non-banking lenders which received SBCI funding of €91 million are headed up by former senior executives of failed banks. One of these new companies was also handed an equity injection of a further €30 million by the NTMA, which is the parent company of SBCI.

From work by various accountants it is now apparent that the majority of companies in receipt of this fund are using the funds to improve the liquidity of their balance sheets as opposed to lending to SMEs. We need to establish if SBCI is operating in contravention to the Acts.

I thank the Deputy. He will appreciate that I am not au fait with the inner workings of the Strategic Banking Corporation of Ireland. I will certainly raise the matters the Deputy has raised with the Minister for Finance because it is essential that any public body should operate solely within the legislation passed by this House to provide for it.

The Strategic Banking Corporation of Ireland has a mandate to deliver access to finance for Irish enterprises, particularly SMEs, to correct failures in the Irish credit market while encouraging competition. The SBCI does not aim to maximise profits but aims to provide cheaper funding on better terms to small business. It began lending in March 2015 and from then until the end of June 2017 the SBCI has lent €855 million to 21,000 Irish companies employing 100,000 people. The average interest rate it offers is 1.15 percentage points lower than the average market interest rate on loans to SMEs.

All sectors of the economy benefit from SBCI financing, including manufacturing, agriculture, food, retail, health care, transport and construction. The majority of SBCI loans are used for investment purposes and SMEs supported by the SBCI are based in all regions of the company - some 85% of the lending has been to businesses outside Dublin.

It does not lend directly but does so through partner finance providers, known as on-lenders. It currently has three bank and five non-bank lenders. These are AIB, Bank of Ireland, Ulster Bank, Merrion Fleet, First Citizen Finance, Finance Ireland, Bibby Financial Services Ireland and FEXCO asset management. Some 23.2% of its funding has gone to the agricultural sector and, as I mentioned, 85% of it is outside Dublin.

There is unease over the lack of transparency of this scheme. There is a strongly held view in financial lending circles of favouritism towards the pillar banks and that the conditions of eligibility to the fund are structured in order to suit the big established players in the market - a view that the existing terms and conditions and format are anti-competitive and have a detrimental impact on those lenders which cannot reach the unrealistic and unobtainable criteria set out in the scheme.

In view of the enormous sums of money involved, representatives of the SBCI should be given the opportunity to appear before the appropriate Oireachtas committee to ascertain what oversight, measurement or assessment of the operations of the fund have been conducted by the Department of Finance and to find out what benefit has accrued to the SME sector. What kind of return is evident in terms of stabilising troubled small companies, protecting jobs and enabling growth in job opportunities in the SME sector? We need a review to understand if the SBCI is delivering on its remit generally. Is the State getting value for the expensive administration overheads of the SBCI?

In terms of the breakdown, the Strategic Banking Corporation of Ireland, SBCI, has committed €881 million to its on-lending partners. The vast bulk of that, €400 million has gone through AIB, followed by Bank of Ireland, €200 million; Ulster Bank, €75 million; Finance Ireland, €51 million; First Citizen, €40 million; Bibby Financial Services, €45 million; and FEXCO, €70 million. It is certainly the case that the bulk of the lending has gone through the very large pillar banks.

The Deputy's suggestion that the SBCI appear before the finance committee or another appropriate committee to account for itself and the work it is doing is an appropriate one. I see no reason that should not happen or that it would be unwilling to appear before the finance committee but that is a matter for the Chairman and members of that committee. I know the very thorough work it did around the tracker mortgages. I am sure it could do some good work around this as well.