Irish SMEs could benefit greatly from Capital Markets Union

Irish small and medium-sized enterprises (SMEs) could profit significantly from a potential Capital Markets Union (CMU), according to financial services Commissioner, Jonathan Hill.

Commissioner Hill spoke with the Institute of International and European Affairs (IIEA) and said that small businesses in particular could benefit from access to alternative funds as well as funding from banks.

The CMU is an important facet in the European Union (EU) jobs and growth agenda, with the aim of breaking down cumbersome lending processes and unnecessary barriers to finance for growing businesses.

“Ireland has the potential to benefit strongly from the Capital Markets Union,” said Hill.

“I think that your SMEs would benefit from greater access to a variety of sources of capital alongside bank lending and your strong fund industry would benefit from a wider pool of potential investors across the EU.”

Across Europe, the vast majority of small and medium-sized businesses borrow from their own countries’ banks, unlike in the US where companies rely mainly on shares or bonds to raise finance.

Last month, a public consultation on the CMU plans concluded and Hill believes there is a groundswell of support for it across the continent.

Hill revealed that three themes had been identified as being at the heart of the project: how the CMU can increase funding options for ambitious businesses, how the CMU can create profitable avenues for investors and how the CMU can encourage cross-border investment.

At the annual conference of the Federation of International Banks in Ireland, Hill confirmed more than 35,000 people are directly employed in Ireland’s financial services sector.

Hill believes the addition of a CMU could help the Government achieve its objective of boosting employment in the sector by as much as 10,000.

Simon Harris, junior finance minister, believes that a potential CMU could increase issuer and investor access to more liquid European markets, resulting in Irish firms’ ability to expand and create jobs.

“I believe that the financial services sector in Ireland faces and will continue to face challenges,” said Harris.

“There are local, national and global competitive challenges which we must and will face.

“We have a strong competitive position but we cannot afford to stand still. The IFS strategy is part of the process of remaining competitive now and in the future.”



Image: Yanni Koutsomitis

Date published 23 Jun 2015 | Last updated 23 Jun 2015