The government in France has is to develop a state run business loans bank which is set to have in the region of €20bn to lend out to the small business community in the country.

Francois Drouin, head of OSEO (a combination of two state agencies ANVAR – French innovation agency  and BDPME – SME development bank) , said the new bank will be a 100%-owned unit of his group, which aims to help small- and medium-sized companies.

With capital of €1 billion, Oseo Industrie would be able in theory to provide credit of up to €12 billion, Drouin said. When this is matched with private sector finance from the conventional banks, it should be able to offer up to €25 billion, he added.

As the new bank, first proposed by President Nicolas Sarkozy in January as part of efforts to help a slowing economy, is to be set up so quickly, it will begin its work first by distributing existing Oseo products, Drouin said.

He said that while it was clear that French banks were cutting back credit overall, there was no sign as yet that small- and medium-sized companies were being affected.

Perhaps here in Ireland we could use something similar to effect the much needed change in the banking system towards SMEs. However the will of change must be within the political establishment – The question is do they have the stomach for change?