Reasons to believe Irish banks will soon need to build their SME lending teams

Irish banks' tendency to redeploy lending staff to credit workout roles has created a dearth of skilled candidates as pressure mounts for them to increase lending to small and medium enterprises. But a combination of external recruitment and in-house training is being rolled out to address this.

A new Central Bank report into the SME lending practices of six Irish banks - AIB, Bank of Ireland, Ulster Bank, KBC Bank Ireland, ACC Bank and National Irish Bank - suggested that there's a significant skills-shortage within the institutions to meet their ambitions for future SME lending.

"We consider that the banks have a significant retraining challenge to ensure that their staff possess the requisite credit skills in order to execute their SME plans," it said.

To the Irish Small and Medium Enterprises Association (ISME) this is old news. Mark Fielding, chief executive of the organisation, says that its members consistently complain about the service levels and skills of the SME lending teams within Irish banks.

"We brought this to the attention of the minister two years ago, and it's only since May 2010 that anything has been done to address this," he says. "Our members have spoken to banks' relationship managers who have little understanding of projections, balance sheets and other core elements of lending and are more interested in selling insurance or other products than making loans."

In fairness, the Central Bank report suggests the banks have been rolling out initiatives to improve the skills within the SME lending teams, but there's also a need to recruit externally in order to ensure their teams are adequately resourced.

"One reason for this was the decision to transfer experienced credit staff to areas where the need was perceived as greatest from the risk perspective," it said. "This is now improving as the banks are rebuilding their credit-skilled staffing numbers to acceptable levels."

Fielding says that there's anecdotal evidence that banks have been recruiting for their SME lending teams, but that few would be willing to admit this at a time when "redundancies are looming".

Financial services recruiters also suggest that banks are still maintaining a cautious approach when it comes to hiring in this area.

"Lending roles within banks' SME teams are still few and far between as most are still not in a phase to generate new business and are focusing on the operational side of credit," says Matt Doyle, consultant, financial services at Morgan McKinley in Ireland. "When these roles do emerge, banks are focusing very much on hiring people with exactly the right fit of skills and capabilities to get the job done."