ONE in three businesses who had a decision to reject their loan application overturned by the Credit Review Office went on to default on the debt, Bank of Ireland has claimed.

Executives from AIB, Bank of Ireland and Ulster Bank were in front of the Jobs Committee at Leinster House yesterday to answer questions in relation to lending to small and medium enterprises (SMEs).

AIB says it has approved debt write-offs for 1,500 businesses as it works through its overhang of problem SME loans.

The numbers contrast with rivals including Ulster Bank which says it will not write off debts unless a business goes to the wall.

Ulster Bank approved €850m of fresh loans for SMEs last year, its CEO Jim Brown told the committee. In 2013, only 50pc of approved loan were actually drawn down, he said. However, in the first three months of this year the rate of actual lending by Ulster Bank was three times higher than in 2013.

Bank of Ireland’s Richie Boucher told the committee that a third of SME loan applicants, who were initially rejected by the bank but had the decision overturned by the Credit Review Office, later defaulted on their debt.

Mr Boucher told TDs yesterday that 70 applications rejected by the bank last year were later approved by the CRO.

All told, the bank said that it approved about €4bn in loans for businesses last year, with about 50pc of that taken up.

Mr Boucher said there was about 1,000 credit applications being received per week, with an approval rate of about 85pc.

“We’ve a desire to approve credit, but we will get it wrong. We will lend money to people that will default in a year’s time. And we will decline some customers that might have been able to repay us,” he said.

AIB director Bernard Byrne told the committee that as much as €9bn of the bank’s total of €15bn of problem SME loans relate to so-called “non-core” investment, mainly property.

Problem or risky loans to 9,000 customers are being handled by the bank’s Financial Solutions Group, he said.

To date, the bank has approved restructuring deals featuring some element of “debt compromise” or forgiveness to 1,500.