Irish Credit Bureau closure plan triggers warning on SME loans


The Irish Credit Bureau (ICB), owned by a group of current and former lenders in the state, informed users that it plans to close by the end of the year, prompting fears among some non-bank lenders that “data gaps” on creditworthiness could result. affect lending to small businesses.

Founded in 1963, ICB has warned repeatedly in annual reports in recent years that its future is “uncertain” after central bank Ireland’s new Central Credit Registry (CCR) was established and began collecting credit information and issuing credit reports to lenders in 2017.

Although CCR can store information for borrowers for five years, lenders are only allowed to see transactions for two years when viewing their credit reports. ICB provides access to a borrower’s credit history for five years.

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

The Irish Association for Asset and Invoice Financing (IAIFA), made up of 25 small and medium-sized business consumers and lenders, wrote to ICB last month asking the bureau to continue to provide “needed” services.

Outdated data

“IAIFA sees a significant risk of losing legacy ICB data and adamantly states that providing access to ICB data will allow us to remain prudent and bona fide lenders until an alternative solution is available through CCR,” Lobby Group Chair. Brian Merrigan, says a letter seen by The Irish Times.

The letter highlights the lack of access to information on directors, shareholders and guarantors of SMEs when accessing CCR reports, as well as a limited two-year retrospective analysis of transactions, leading to potential data gaps when it comes to evaluating loan applications.

Sources in the non-bank lending sector said that major banks, which typically have long-standing multifaceted relationships with clients, will have a competitive advantage in the SME lending market by having access to borrower information on their files. It comes like AIB as well as Bank of Ireland intend to strengthen control over lending to SMEs as Ulster The bank, another major player in the sector, will be phased out in the coming years.

Post-crisis reforms

Mary Leonard, ICB’s chief executive, told The Irish Times that the bureau will stop providing services at some point in the last three months of the year, and a date has yet to be set.

“The Central Credit Register was established in accordance with the 2013 Credit Reporting Law as part of the post-crisis reforms. Most ICB members indicated that they intend to rely on the data to inform their lending decisions, not on ICB’s services, ”she said.

According to documents filed with the Companies Registration Service, AIB is the largest shareholder with an 18.6% stake. The Bank of Ireland owns 17.4 percent of the shares and Ulster Bank about 15 percent. Fexco owns 12 percent, while companies associated with a number of former lenders in the market, including Anglo Irish Bank and the Irish National Building Society, GE and AKK Bankalso save attachments.

ICB reported profit of 3.9 million euros on revenues of 6.3 million euros in 2019 – a profit margin of 61.5%. The company failed in the sale process in 2010, when its shareholders were looking for 100 million euros for the business. According to the company’s latest report, it also received a tender last year. The offer is said to have valued the business at around 4 million euros, but did not result in a deal.

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