BANK OF Scotland (Ireland) has said it will lend €1 billion to support "needy consumers and business customers" in 2009, focusing on mortgage borrowers, small and medium-sized businesses and hotels in particular.
The money comprises €900 million in loans and a €100 million venture capital fund through which the bank will provide finance to companies in return for minority stakes in those firms.
The €1 billion fund will be made available to existing and new customers over the next four to five months. It includes a €100 million fund to support struggling hotels and €100 million announced last week for first-time home buyers who can borrow mortgages at a two-year fixed-rate of 3.2 per cent.
Bank of Scotland (Ireland) chief executive Mark Duffy said the unavailability of credit had become a real issue and something needed to be done to get credit back into the economy. "(We are) putting a meaningful amount of money targeted at the various sectors that make up our customer base to get them moving and get them over what is going to be a very difficult period."
The hotel fund enables customers to take payment breaks of up to four months or opt for interest-only repayments. Hotels account for about 5 per cent of the bank's €32 billion loan book.
Mr Duffy said the fund would help hotels through the difficult winter period. He said this sector was the one "at the most peril", needing loans imminently.
Bank of Scotland (Ireland) is, like three other Irish banks, in discussions with the European Investment Bank to access its €30 billion fund for small businesses.
The Irish Banking Federation (IBF) warned that lending initiatives for businesses would not be a panacea for the many challenges facing businesses. Pat Farrell, chief executive of the IBF, said companies also faced sharp falls in consumer spending.
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