According to Finance Minister Simon Hamilton, Northern Ireland’s largest obstacle on the path to economic recovery is “the banking situation.”
He stated there was “anecdotal evidence” that NI’s firms were having “severe difficulty” obtaining finance to allow them to invest and grow, to the detriment of NI as a whole.
Hamilton also told the senior MPs the “biggest worry” for the county was access to finance.
Northern Ireland’s finance sector was battered during its property cash – having to close branches, recording huge losses, and cut staff.
The Northern Ireland Affairs Committee in Westminster is therefore holding an enquiry into the banking system, looking at how they operate, are managed, and how they provide services to small and medium-sized business in Northern Ireland.
The banks themselves will give evidence in January.
The finance minister also noted that his own measures and engagement with the banks had shown “limited impact”.
This was mainly attributed to the management and ownership structure of Northern Ireland’s banks, whereby the majority of decisions were made outside of Northern Ireland – with two of the “big four” banks being controlled from Dublin, and a further bank answering to powers in Denmark.
Furthermore, he added: “It’s very unusual for a unionist politician to say, but our problem is more Irish than British in many respects,” referring to the island-wide property crash.
He said the local banks were still “encumbered” by a property overhang – a problem not witnessed in the rest of the UK, Dublin, or indeed Denmark.
“If we don’t get to grips with the property issue then I think we’re going to have long-term sustainable problems,” he continued.
Mr Hamilton was also asked for his estimation on the Tomlinson report into the Royal Bank of Scotland (RBS), owner of Ulster Bank, the largest of the so-called “big four.”
In Tomlinson’s 20-page executive summary, he cites evidence that RBS’s global restructuring group, has been deliberately bankrupting companies and subsequently selling their properties to West Register, its specialist property arm.
Hamilton stated while the report did not disclose information on Ulster Bank, he had witnessed evidence of what looked like “sharp practice.”
Ulster Bank has been one aspect of a long list of controversies surrounding RBS; leaving the parent bank with massive losses and crippling debts after the financial crisis.
Hamilton noted companies do not always tell the full story.