The Strategic Banking Corporation of Ireland Act, 2014 establishes the Strategic Banking Corporation of Ireland. Its purpose is to lend strategically within the economy. It is focus on the credit needs of small to medium sized enterprises in the first instance. It is intended that in due course, other areas of the economy where credit needs are not being served, will be assisted by SBCI.
The Corporation is re-established as a company in accordance with the provisions of the legislation. The main functions of the corporation is to promote and facilitate the availability of credit in the State, suitable to the needs of borrowers, to encourage effective competition in the provision of credit and to pursue economic development and contribute to the international competitiveness of the economy.
The Corporation is to provide additional credit in the State in a prudent manner and to source the appropriate funding to allow it to lend. The Corporation is to seek to improve the credit market in a number of ways and to provide finance to projects that will contribute to economic activities.
The board of the Corporation constitutes nine persons including a chairman. The first members are appointed by the Minister and subsequent boards are appointed by the Corporation, in accordance with the terms of its memorandum and articles of association.
The NTMA is to assign staff to the Corporation, to enable it to carry out its function. They may also supply treasury services and advice on treasury matters. It may enter into transactions of a banking nature, as agent of the Corporation.
The authorised capital of the Corporation is to be provided by the Minister for Finance. It will issue shares of €10 million to the Minister, such equity to come from the National Pensions Reserve Fund. The authorised share capital is €250 million or such higher amount as the Minister may decide, up to €1 billion. If further equity is required, it may issue further share capital in exchange for conversion of outstanding loans from the fund or out of the central fund or a combination.
SBCI may obtain funding from a range of sources. It is to concentrate initially, on bilateral arrangements rather than market funding. It is intended that it will undertake other funding later. Equity is to be provided in part by the National Pension Reserve Fund. The SBCI may borrow up to €4,000,000,000. Guarantees may be made by the State in respect of certain borrowings of the Corporation. In relation to foreign currency, this is to be valued with reference to published exchange rates.
The Minister may give directions to the NPRF commission, which it must comply with. He may direct the NPRF to provide credit to the Corporation and to exercise any rights based on such direction.
The maximum amount of funding which can be provided by the Minister is €5 billion. The board of the Corporation may decide what dividends are to be paid. There are provisions for Ministerial guarantees up to €4 billion. The terms of the guarantee must be laid before the Oireachtas, as soon as possible after it has been made.
There are provisions for public accountability. The Corporation must submit accounts to the Controller and Auditor General for audit. They are to be laid before the Houses of the Oireachtas. A senior member appointed, by the Corporation, whenever required by the Public Accounts Committee or Controller and Auditor General is to attend and give evidence on matters specified.
There is provision of a number of tax exemptions for the Corporation. These are applied for so long as the Minister for Finance is to sole shareholders. There is no tax on income and gains of the Corporation or its wholly owned subsidiaries. The Minister may dispose of shares, as he deems appropriate. Any funds are to go to the Exchequer.
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