A NEW BANK geared towards providing finance for small and medium enterprises has gained access to €800 million in funding.

The Strategic Banking Corporation of Ireland (SCBI) was launched today, and will be formally up and running by the end of the year.

The Government hopes that it will become a “key source” of low-interest funding for SMEs.

“The legislation which established the SBCI allows for up to €5 bn to be made available to SMEs over the next five years,” Minister for Finance Michael Noonan said.

This new source of competitive and innovative funding will support SME’s to grow and invest and create jobs.

The Irish Small and Medium Enterprises Association has welcomed the launch of the SCBI, but warned that a close eye must be kept on where the funds are allocated.

Finance Minister Michael Noonan and the Minister for Public Expenditure and Reform, Brendan Howlin, met with German Finance Minister Wolfgang Schaeuble (centre) to sign an agreement to establish the new Strategic Banking Corporation of Ireland. Mark Stedman / Photocall Ireland Mark Stedman / Photocall Ireland / Photocall Ireland

“An oversight body must monitor the situation strictly and banks must be compelled to report to this body regularly,” CEO Mark Fielding said, recommending that returns on the loans made be submitted to the Central Bank, to assist the oversight process.

“This initiative could potentially be of great benefit to job and wealth creating Irish SMEs but only if the Government ensures that the bailed out banks stick to the rules,” he added.

It was also welcomed by the Smalls Firms Association, but Sinn Féin has branded the bank as “a broken promise dressed up as good news”.

Finance Spokesperson Pearse Doherty said:

The government rushed through the Strategic Banking Corporation Ireland Act earlier this year. The name of the Act gives the game away; we will have a Banking Corporation, not a bank. The new body won’t have a banking licence. The government’s promise to set up a Strategic Investment Bank has been dropped.

“This proposal is a shadow of what Sinn Fein has argued for – a State Bank that invests in the real economy. The SME sector is crying out for investment and for credit. The banks the people bailed out are not lending in a fair way to Irish businesses.”

RTÉ News reports that the Government will provide €240 million to the new bank. €400 million will come from the European Investment Bank, and €150 from KfW, a German bank.

Read: Why the state’s new investment bank will do little to help Irish SMEs >