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The Irish SME lending market - a snapshot, December 2010

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  • Lawless, Martina

    (Central Bank of Ireland)

  • McCann, Fergal

    (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.

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Bibliographic Info

Paper provided by Central Bank of Ireland in its series Economic Letters with number 03/EL/12.

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Date of creation: Feb 2012
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Handle: RePEc:cbi:ecolet:03/el/12

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  1. Lawless, Martina & McCann, Fergal, 2011. "Credit Access for Small and Medium Firms: Survey Evidence for Ireland," Research Technical Papers 11/RT/11, Central Bank of Ireland.
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Cited by:
  1. Rory McElligott & Martin O'Brien, 2014. "The evolution of loan level data in Ireland," IFC Bulletins chapters, in: Bank for International Settlements (ed.), Proceedings of the Porto Workshop on "Integrated management of micro-databases", volume 37, pages 18-23 Bank for International Settlements.
  2. Lawless, Martina & McCann, Fergal, 2012. "Determinants of default: Evidence from a sector-level panel of Irish SME loans," Research Technical Papers 03/RT/12, Central Bank of Ireland.

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