PUBLIC BANKING REPORT – The need for an alternative to Big Banks

The government has finally published the Report Investigating the establishment of a Public Banking Network in Ireland

Public Banking is poorly understood in an Irish context. A public bank is emphatically not a nationalised bank like the AIB. Public Banks in other EU member states are often municipally owned and/or restricted to a specific geographical area to promote regional development. They are not for profit and can provide a valuable impetus for regional development and an alternative for customers to the major shareholder driven private banks.

Given the loss of Building Societies and the old Trustee Savings Banks from the Irish Financial landscape there is a clear gap in the services available between the Credit Unions and Big Banks. In light of the misbehavior exposed at Irish Banks and the financial crash, many commentators have suggested the Big Banks monopoly of retail banking needs to be challenged by a new service provider with a different ethos.

While it is welcome that there will be a further independent assessment of public banking along with the Credit Unions and An Post, the Labour Party will be seeking an assurance this will be acted upon by the government and that the Credit Union movement get a clear roadmap as to how they can develop and expand their services to the community.

To date the Central Bank has been very active in telling the Credit Union movement what they can’t do, but has been wanting in providing the Credit Union movement with a roadmap to develop their services.

Below is the transcript of my debate with the Taoiseach yesterday

Taoiseach’s Questions 4/7/18

JOAN BURTON TD

In the context of the social economy, we have been awaiting a report on social and community based banking from the Government for some time. The main banks are closing their branches, particularly in rural Ireland and disadvantaged urban communities, and the post offices are planning to do the same. There is a proposal for community based banking with perhaps a pilot scheme from Sparkasse, the German community bank that has been operating for a long time. It has offered to run a pilot scheme in Ireland to show how a new form of community banking that would include home loans would operate. I am told the Department of Finance – with no women at the helm, by the way – is actually set once again to give this the thumbs down. Is this real in terms of the crisis we have heard about this morning in different parts of rural Ireland? There is also a crisis in a significant number of disadvantaged communities that still have high unemployment.

TAOISEACH:

In respect of community banking, the Government is considering the Sparkassen proposal. What might not come across a lot of the time is the fact that Sparkassen’s request is that the Government would put €150 million or more into this. It is one thing if a bank wants to set up in Ireland, and we welcome competition and want more banks to set up in Ireland and give more credit, but it is another thing when the bank is asking the Government to pay for the setting up and to capitalise it. That is a definite difficulty we have. We must also bear in mind that we have some forms of community banking such as credit unions which provide all sorts of community banking and can probably do more. We would like to see An Post provide banking services more. For the Government to stump up the money for an institution to come in and do it is a very different question. This point has been missed in the debate.