Northern Ireland

Banks 'biggest block' to NI economic recovery

Image caption A Westminster committee is holding an inquiry into the banking system in Northern Ireland

The biggest impediment to economic recovery in Northern Ireland is "the banking situation", according to Finance Minister Simon Hamilton.

He said there was "anecdotal evidence" that firms were having "severe difficulty" getting finance that would allow them to invest and grow.

Mr Hamilton told a Westminster inquiry that access to finance was his "biggest worry".

The banks are due to give evidence to the inquiry in January.

Westminster's Northern Ireland Affairs Committee is holding a wide-ranging inquiry into the banking system in Northern Ireland.

The finance minister told the committee that engagement with the banks by him, and other executive ministers, had shown "limited impact".

This was because of the structure of the banking industry in Northern Ireland where the ownership of the banks meant key decisions were largely made outside Northern Ireland.

Two of Northern Ireland "big four" banks are ultimately controlled from Dublin, while a third is Danish owned.

Mr Hamilton said the local banks remained "encumbered" by a property overhang, meaning their problems were different from those faced by the sector in the rest of the UK.

He said their problems were "more Irish than British", referring to the island-wide property crash that has weakened the banks.

Mr Hamilton was also asked about the Tomlinson report into RBS, which alleges that a division of the bank, the GRG, has been deliberately bankrupting companies in an effort to make profits for the bank.

He said that while the report did not look at Ulster Bank, which is part of RBS, he had heard "anecdotal evidence" of what "on the face of it looks like sharp practice".

He added that when companies complain they did not always tell the full story.

The banking inquiry is looking at at the way banks are run, how they provide finance to small and medium sized businesses and access to banking in rural communities.

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