Business

London urges Stormont to "keep a close eye on Cerberus"

 Banks have come under scrutiny from a Westminster committee
Gary McDonald Business Editor

The British government has warned the Stormont Executive to "keep a close eye" on the situation around the Cerberus purchase of Nama assets in the north.

It came after members of a Westminster committee looking into banking matters revealed they have heard "disquieting stories" from some businesses in Northern Ireland that they were being "treated by Cerberus in a less than sympathetic manner".

The government was giving its formal response yesterday to the Northern Ireland Affairs Committee's 'Northern Ireland: banking on recovery?' report drafted last year.

A section of that report focused on the impact in the north of the National Asset Management Agency (Nama) bad bank, which acquired problem loans following the property crash.

In April last year Nama sold its Northern Ireland loan portfolio - which had a face value of £3.5 billion - to US private equity firm Cerberus Capital Management for £1.3 billion.

The original report challenged First Minister Peter Robinson's assertion that the deal was "excellent news" for the north's economy, claiming it was "too early" to draw such conclusions.

It has since emerged, of course, that £7 million was lodged in an offshore bank account on the Isle of Man, allegedly to pay off an unidentified Northern Ireland politician or political party in connection with the Cerberus deal. That is the subject of an ongoing investigation.

In its response yesterday, the government said: "We find it strange that no Memorandum of Understanding was ever agreed between the NI Executive and Cerberus, and therefore recommend that the Executive keeps a close eye on this situation."

It added: "A potential Memorandum of Understanding is an issue for the Northern Ireland Executive. But it is important that Cerberus lives up to its commitment to be a good partner for Northern Ireland."

The 'Banking on recovery?' report by the NI Affairs Committee - chaired by Laurence Robertson MP and whose members include local MPs Lady Sylvia Hermon, Danny Kinahan, Dr Alasdair McDonnell, Ian Paisley and Gavin Robinson - took a broad-brush look across the entire financial services sector in the north.

It including focusing on lending to SME businesses, transparency in the sector, participation (or lack of it) by local banks in the Funding for Lending Scheme, recent bank IT failures and branch closures.

In its response, the government concluded: "Although the situation in the property market does still give some cause for concern, and whilst it has taken time for the banking sector to re-establish confidence and to be considered again as 'open for business', we welcome the fact that, over the past year, the Northern Ireland economy has shown definite signs of recovery, with many new jobs recently being announced.

"Added to this good news, the banks themselves are showing a return to profitability.

"The government's long-term economic plan has laid the foundations for a stronger economy, and the UK's recovery is now well established."

But Federation of Small Business NI Policy chairman Wilfred Mitchell said there remains "specific concerns" around how access to finance impacts on small firms in the north.

“There is a real need for the breakdown of figures on the finance available to start-up businesses.

"Small businesses often find that they are treated worse than other banking customers. They pay the same fees as bigger firms yet do not have the same access to relationship managers available nor are they afforded access to buffer zones or grace periods for late fees and overdrafts.

“Northern Ireland has a distinctly different banking structure from the rest of the UK, with the four major banks holding over 90 per cent of the stock of the business current account market meaning there is a considerable lack of competition in terms of customers shopping around for better interest rates and service.

“Increased awareness, and uptake of alternative financing options, is one area that we encourage our members to consider in order to increase competition within the access to finance sector as well as looking at options to encourage more challenger banks, to the big four, to develop in Northern Ireland.”

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