The Irish SME lending market - a snapshot, December 2010

Martina Lawless and Fergal McCann ()

No 03/EL/12, Economic Letters from Central Bank of Ireland

Abstract: The Prudential Capital Assessment Review (PCAR) 2011 uncovered significant potential losses in the Irish banking sector, leading to a considerable recapitalisation. This letter uses a large sample of the loan level data provided for PCAR 2011 to present descriptive statistics on the SME lending market in Ireland as of December 2010. These data allow us to document the geographic and sectoral allocation of loans, exposure sizes and the performance of those loans. We find that there are significant losses, both incurred and potential, across all sectors of activity. These losses are most severe in the hotels and restaurants, construction and wholesale and retail sectors. In almost all sectors, a striking pattern in which large exposure buckets are associated with larger shares of non-performing loans, points to a higher-than-normal risk of large SME loans leading to significant losses. The contribution of property speculation to these losses is unobserved in these data but of huge policy interest.

Date: 2012-02
New Economics Papers: this item is included in nep-ban
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