Economist Morgan Kelly's warning that the European Central Bank is planning a "clean-up" of Irish banks will be taken seriously by government, Minister for Finance Michael Noonan has said.
In a lecture at University College Dublin, Prof Kelly said a clean up of SME bank loans by the European Central Bank may lead to large section of economy being “wiped out”.
Prof Kelly, who was the first economist to predict the likely scale of the Irish banking collapse, said the “real crisis” for the Irish economy may not yet have happened.
Speaking in Brussels on his way into a eurogroup meeting of finance ministers, Mr Noonan said Mr Kelly had a good record in the past, adding “anything he says we’ll take it seriously.”
If the Irish banks were forced to deal with bad loans to small and medium-sized enterprises, “we could be facing something really, really terrible, quite soon,” Mr Kelly told a meeting of the Economics Society at University College Dublin.
Mr Noonan today said Bank of Ireland has restructured 90 per cent of its SME loans, AIB has restructured 65 per cent and the Central Bank has expressed satisfaction at the progress being made.
“I still would like to examine Morgan Kelly’s views in details, and maybe if the Central Bank who have the primary responsibility here, would contact him…have a conversation about his concerns, that might be helpful.”