Property debt hits relatively few SMEs

Property-related debt among SMEs is concentrated among a relatively small number of firms, which have much higher default rates than the industry average, according to the Central Bank.

The issue of SME debt has generated considerable media coverage since UCD economics lecturer Morgan Kelly said last March there was a huge quantum of property losses sitting on the balance sheets of the banking system that would topple the economy.

He argued there was €56bn of SME debt and roughly half of this related to speculative property loans. Moreover, following the ECB stress tests later this year, the banks would be forced the turn the screw on SMEs with high debt levels, which would trigger a wave of business failures and result in spiralling unemployment.