New EU rules for bank capital adequacy - Basel II - could hit Irish small- and medium-sized businesses' (SMEs’) ability to attract venture capital, said chairman of the Irish Venture Capital Association (IVCA) Michael Murphy.
Mr Murphy said that Irish and international banks have accounted for Ђ250m, or 24% of the total raised, in venture capital funds over the last five years. If the Basel Committee places more stringent risk weightings on bank capital adequacy, as it plans to in 2007, this could force banks to invest less in venture capital funds, he warned.
"This would predominantly hit SMEs, who need venture capital most and are the drivers of future growth and innovation," he said. Mr Murphy, who is also chief executive of NCB Stockbrokers' venture capital arm, said he backed the European Venture Capital Association (EVCA) call for the EU to carefully evaluate the implications of Basel II.
