Northern Ireland’s banking sector is showing signs of recovery despite suffering more during the recession than the rest of the UK, a Treasury minister has insisted.
Financial Secretary Sajid Javid told a Westminster committee there was evidence the banks had been lending more in the last year after taking a double battering in the economic crisis.
“Overall I think Northern Ireland is open for business,” he told the Northern Ireland Affairs Committee.
Committee members are holding an inquiry into the banking system in the region and have already heard evidence from representatives of banks that operate in Northern Ireland.
Today it was Mr Javid’s turn to face their questions.
Asked by Labour MP Kate Hoey why efforts to boost lending apparently had not been as successful in Northern Ireland as in the rest of the UK, the minister replied: “I think one factor is it’s fair to say the entire UK suffered from the banking crisis and that clearly had a knock on impact to lending, especially in the early years.
“And there are very positive signs, particularly in the last year, of things getting much better.
“But in the case of Northern Ireland I think it sort of had the double problem of its neighbour not only having a banking crisis, but one of the biggest banking crises at that time, and we all know the consequences in the Republic of Ireland of that banking crisis.
“And given that at least two of the banks operating in Northern Ireland are also big Republic of Ireland banks there was also going to be a knock on impact of that as well.
“I think in fairness, Northern Ireland was hit at both ends - with the crisis in the UK and an even bigger banking crisis in the Republic of Ireland.”
Mr Javid said when the Government agreed to lend the Republic £3.2 billion at the height of its difficulties in 2010 it was influenced by the need to protect cross-border economic linkages with the Northern Ireland.
“One of the things uppermost in our mind was the integration between Northern Ireland and the Republic of Ireland,” he said.
The Conservative MP told the committee that he felt the worst was over.
“I think it is fair to say that the Northern Ireland banking sector, like the banking sector in the rest of the UK, has gone through a very difficult challenging time over the last few years and that has certainly manifested itself, for example, in issues around capital and making sure banks have enough capital,” he said.
“I do think over the last year especially the banking sector overall in the UK, including Northern Ireland, has improved considerably in terms of its access to capital.”