The SBCI has made tremendous progress since the passing of its governing legislation in July 2014 and establishment that September. We put our initial funding in place by October 2014 and had our first loan product up and running by February 2015. We have continued to build on this progress through 2015 and into 2016 providing a suite of products tailored to meet the business needs of SMEs and offering these products through a diverse range of innovative and high quality on-lenders.

The SBCI was established to access low cost long-term capital from multilateral and State financing sources and to channel this capital to Irish businesses, in particular SMEs. The financial crisis revealed the extent to which SMEs form the backbone of the economy and to which the country is reliant on them as generators of employment. However, it also demonstrated their heavy dependence on bank-sourced credit. This has shown the need for a mechanism to channel finance to the Irish SME market that reacts to its needs and will be supportive, including in market downturns. We are seeking not only to ensure that credit is available on reasonable terms to but also to address the persistent premium in the cost of finance available to Irish SMEs compared to other businesses of greater scale and to other European SMEs. We aim to deliver effective financial supports to Irish SMEs, while driving competition and innovation.

During our first year we have focused on securing our initial funding tranches, putting in place our first on-lending facilities and developing our suite of products. We have decided to operate through an on-lending model providing low cost wholesale finance to participants in the SME market rather than become a retail actor in the market ourselves. This will enable us to maintain flexibility, facilitate rapid deployment of funds and to keep our costs, and ultimately the costs charged to SMEs, down. We are working to build a diverse and healthy pipeline of on-lenders, both bank and non-bank, in order to increase competition and also to facilitate new entrants to the market. Our aim is to develop a functioning commercial market rather than a State supported one.

Following our initial establishment phase we have spent some time during 2015 on the development of our longer-term strategy and, in particular, on our objectives for 2016 and 2017. These objectives are centred on our vision of being a strong promotional financial institution that provides effective financial support for Irish SMEs and promotes the economic development of the State.

In delivering on our approach of providing our products through on-lending partners, putting in place a healthy mix of quality on-lenders and a pipeline of new on-lenders will be a key objective over the next two years. Other strategic objectives include growing our funding capacity, supporting a variety of finance types and sourcing and delivering the various EU supports for SMEs in a way that makes them relevant, usable and effective.

Our strategic objectives have been developed based on our experience over our first year in operation and, critically, on our discussions with SMEs on their financing challenges and requirements. We believe they are ambitious yet achievable. They will build on the significant progress we have made to date and will provide SMEs with the tools to optimise the financing of their businesses.

Upon incorporation in September 2014 the SBCI was established with a three person board. This board worked extremely hard with what was effectively a start-up operation to get our funding arrangements, initial on-lender relationships, product programme and corporate governance policies and procedures in place. The board was supplemented in March 2015 with six additional members bringing a range of valuable credit and wider business expertise to the organisation.

I would like to thank all my fellow directors and the SBCI staff for their contribution to developing the SBCI so quickly into a functioning and growing business. I would particularly like to thank my predecessor as Chairperson, John Corrigan, who chaired the SBCI from its incorporation in September 2014 to his retirement as Chief Executive of the NTMA in January 2015. We have made very rapid progress in our first full year of operation. Our objective now must be to build on this momentum to make a real and substantial contribution to the availability of affordable credit to businesses and to economic development in Ireland.

Conor O'Kelly

Chairperson