PRESS RELEASE
29 January 2009
Irish privately held businesses (PHBs) are expecting their lenders to remain supportive in 2009 despite the fact that they also anticipate credit drying up, according to major new international study.
The Grant Thornton
International Business Report, which was carried out across 36 countries, shows that Irish businesspeople are amongst the most gloomy when it comes to predicting the amount of money that will be made available by the banks in the coming year.
The survey showed that when compared with Ireland, only businesses in Belgium and Thailand were predicting even less credit being available in 2009.
80% of those surveyed in Ireland believe finance will be less or much less available in 2009; however, paradoxically, some 65% of respondents believe that their banks will be supportive of them in these tougher economic times.
According to Central Bank figures from November there is nearly €400bn extended in credit to privately held businesses in Ireland.
Since these figures were published many small businesses have seen their credit lines disappear as banks have become increasingly nervous about commercial lending.
Michael Neary, Corporate Finance Partner at Grant Thornton said: “In order to ensure the survival of Irish SMEs, credit institutions need to continue provide lending and not just a sympathetic ear.
“There are over 200,000 small businesses in Ireland. They depend on credit institutions to supply working capital and to supplement normal business cash flow”, he said.
With the nationalisation of Anglo Irish Bank and re-capitalisation of other banks, Michael Nearly believes the government should use its new influence to promote lending to privately held business to ensure their survival.
“The government needs to ensure the recapitalisation happens quickly so that a programme can be devised that stimulates lending to businesses in the economy,” continued Michael Neary.
“The government’s role is important in encouraging credit institutions to back ordinary businesses which are essential to the economy.
The IBR report suggests that internationally PHBs could be facing a global lottery for survival or failure at the hands of their lenders.
61% of PHBs globally expect finance to be less or much less accessible in 2009. However, a surprising 69% of them feel their lender is currently being supportive or very supportive towards their business - even in such difficult times.
PHBs in countries like Australia, India and Poland appear most confident, believing their lenders are currently more supportive and their access to finance better than the global averages.
PHBs in some of the most mature economies such as the United States, United Kingdom, Japan and New Zealand feel they have the support of their lenders but are significantly less confident about the likelihood of those lenders actually providing finance.
The worst off appear to be in Belgium, Thailand, France and Argentina where PHBs not only fear that finance will be less accessible than the global average, but also feel they have the least supportive lenders in the world.
About the Grant Thornton International Business Report
The Grant Thornton International Business Report is an annual survey of the views of senior executives in privately held businesses all over the world. Launched in 1992 in nine European countries the report now surveys over 7,200 PHBs in 36 economies providing territory, regional and global trend data on the economic and commercial issues affecting a sector often described as the 'engine' of the world's economy. Data for eight key industry sectors will be available for the first time in 2009. The research is conducted by Experian Business Strategies Ltd. Grant Thornton International donates US$5 to UNICEF for every completed IBR questionnaire, a donation of over US$39,000 in 2008.
To find out more about the International Business Report, please visit:
www.internationalbusinessreport.com