Noonan tells bank to heed Morgan Kelly
Fears of man who forecast crash
MICHAEL Noonan yesterday urged the Central Bank to heed a leading economist’s warnings about the vulnerability of small businesses.
The Finance Minister’s intervention came after the stark warning from Morgan Kelly, the man who was among the first to predict the property crash.
Mr Kelly said the hefty borrowings of small and medium enterprises for property investments during the boom have left the sector in crisis.
He said many struggling businesses could soon ‘go under’ and cause serious damage to the economy if a European Central Bank stress test forces
‘We have to take him seriously’
banks to sort out the SME sector’s debts.
The Governor of the Central Bank, Patrick Honohan, batted away the concerns last night but Mr Noonan s ai d t he regulator would be wise to heed Mr Kelly.
Mr Noonan said yesterday: ‘I think it’s very important that very good national economists get involved in the debate and Morgan has a good record in the past and anything he says we will take it seriously.’
Mr Noonan said he believed the banks were achieving their goals to reduce the debt of struggling small companies.
He said: ‘Bank of Ireland say they have restructured 90 per cent of their loans, AIB have restructured 65 per cent, and the Central Bank have expressed they are satisfied with the progress being made.
‘I still would like to examine Morgan Kelly’s views in detail and maybe the Central Bank, who have primary responsibility, would contact him and if they got together and had a conversation about his concerns that might be helpful.
‘What Morgan Kelly said has to be taken seriously. If the Central Bank were to get in touch and access the data underpinning his research, that might be helpful.’
Enda Kenny yesterday said the Government was acutely aware of the importance of the SME sector to the economy and for job creation in the years ahead.
The Taoiseach said: ‘The professor’s comments in relation to SMEs are well known to Government. We all understand the situation where many good companies with a thriving business got sucked into the property market during the so-called boom years.
‘That’s a matter for banks to be able to do deals in relation to the property element. That’s why the Government recognised in the last Budget the need to provide t en measures f or SMEs.’
But Central Bank governor Patrick Honohan said the banks would stand up to stress tests.
Asked if Mr Kelly’s comments raised fresh doubts about Irish banks, Mr Honohan responded: ‘I don’t think so, no’.
He said: ‘The purpose of the stress tests is to make sure and convince everybody, both in the markets and among Governments, that the banks have enough to stand on their own two feet.’