Irish credit bureau closure plan triggers warning on SME lending


The Irish Credit Bureau (ICB), owned by a group of current and former state lenders, has informed users that it plans to close by the end of the year, raising concerns among some non-lenders. bank that the resulting solvency “data gaps” could affect small business lending.

The ICB, which dates back to 1963, has repeatedly warned in annual reports in recent years that its future is ‘uncertain’, following the establishment of the Central Bank of Ireland’s new Central Credit Register (CCR) and has started collecting credit information and issuing credits. reports to lenders in 2017.

While CCR can keep borrower information for five years, lenders are only allowed to see transactions going back two years when they look at its credit reports. The ICB provides access to a borrower’s credit history going back five years.

While the ICB allows lenders to research the credit histories of directors and individual shareholders when a company applies for a loan, the CCR does not.

The Irish Asset and Invoice Finance Association (IAIFA), made up of 25 consumer and SME lenders, wrote to the ICB last month asking it to continue providing an “essential” service.

Legacy data

“The IAIFA sees a significant risk in the loss of legacy ICB data and is adamant that the ICB data made available will allow us to continue to be prudent and conscientious lenders until such time. an alternative solution be available through the CCR, ”lobby group chairman Brian Merrigan said in the letter, seen by The Irish Times.

The letter highlights the lack of access to information on managers, shareholders and guarantors of SMEs when accessing CCR reports, as well as the limited two-year hindsight of transactions, resulting in potential gaps in data when it comes to assessing loan applications.

Sources in the non-bank lending industry have said that traditional banks, which typically have long-standing and multi-faceted relationships with their customers, will have a competitive advantage in the SME lending market because they will have access to information on borrowers in their own records. It comes as the AIB and Bank of Ireland are set to tighten their grip on SME lending as Ulster Bank, the other major player in the industry, will close in the next few years.

Post-crash reforms

Mary Leonard, managing director of the ICB, told the Irish Times that the office will stop providing services at some point in the last three months of the year, with a date yet to be set.

“The central credit registry was put in place under the Credit Reporting Act 2013 as part of the post-crash reforms. More and more members of the ICB have indicated that they intend to rely on the data in this document to support their lending decisions rather than on the service of the ICB ”, he said. she declared.

AIB is the largest shareholder, with an approximate 18.6 percent stake, according to documents filed with the Companies Registration Office. Bank of Ireland holds a 17.4 percent stake, while Ulster Bank holds around 15 percent. Fexco owns 12%, while entities linked to a number of former lenders in the market, including Anglo Irish Bank and Irish Nationwide Building Society, GE and ACC Bank, also retain stakes.

ICB reported profits of 3.9 million euros on 6.3 million euros in revenue in 2019, representing a profit margin of 61.5%. The company was the subject of a failed sale in 2010, when its shareholders sought 100 million euros for the company. It also received an offer approach last year, according to its latest report. The proposal would have valued the company at around 4 million euros but did not result in a deal.

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