02 February 2017

The German model of public banking, tried, proven and tested for over 200 years and in 40 countries worldwide provides the solution to a chronic credit shortage for small businesses and would test this Government’s real commitment to the regions and rural regeneration, according to Labour Senator, Denis Landy.

Senator Landy said:

 “The Sparkhassen public banking structure provides an ideal template for accessible regionally structured banking services with an emphasis on SMEs and start-ups which is glaringly absent in the marketplace at present. The time is right and the road map is clearly set out for a meeting of minds and an official policy embrace of this worthy initiative by the Central Bank, the Department of Finance and the Government.

“This example and ethos of public banking can be rolled out in Ireland if there was a political will do do so and the existing Credit Union and An Post structures, expertise and local knowledge are well placed and poised to play their part in such a venture. Irish Rural Link and others are to be commended for championing the cause of such an undertaking in the wake of the banking crisis but their efforts require more impetus and more official buy-in at the highest level in Government if the proposal is to transition from a plan into a functioning banking reality in the regions for the benefit of local commerce and communities.

“The biggest impediment to this proposal now appears to be the Department of Finance and the Government’s love affair with the so called pillar banks, which is a two-legged stool, with all the attendant flaws and failings. This is why we need a viable and sustainable third force in Irish banking which is people centred and locally managed and not revolving around some software alga-rhythm in Dublin to make decisions and determine outcomes.

“The decisions and policies of the existing main banks have done little or nothing to address the credit crunch in the aftermath of the financial crisis, have led to far higher interest rates for all customers than our European counterparts are solely shareholder driven rather than stakeholder focused.

“Along with restrictive and costly higher interest rates this banking model is not good for business, communities, regional development as well as restricting the availability of working capital, investment, start-ups, and fair market conditions.

“At the very least the Government must now realise the merits of this locally based, regionally focused, relationship centred public banking model and support the Irish Rural Link endeavour to establish it on a pilot basis in the Midlands.

“Our current banking system is uncompetitive and not fit for purpose. The Government must act now in the interest of sustainable and balanced regional growth rather than including such notions as aspirations in the Programme for Government and the recently launched Rural Revitalisation Plan.”


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