COMMUNITY BANKING MODEL HAS GREAT POTENTIAL FOR IRELAND

08 March 2017

Labour spokesperson on Rural Affairs, Willie Penrose TD has welcomend the launch of a consultation to investigate the potential of a new model of public banking. This type of community banking has great potential for Ireland, in particular for investment in rural areas.

Deputy Penrose said:

“I welcome the commencement of an investigation into the potential of Public Banking by the Government by the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs.

“This concept is poorly understood in many quarters and needs wider promotion. A Public Bank is emphatically not a Nationalised Bank like AIB. A public banking model has existed in Germany for 200 year

German Public Banks, called Sparkasse:

  • Are municipally owned – not a nationalised bank
  • Would be not for profit and be restricted to lending to the regional economy for its business
  • Would fill the gap left by the demise of the Building Societies and enterprises formerly served by the ACC
  • Both the Post Office and Credit Unions could earn additional income from selling Public Bank services across the counter in their branches
  • Would provide a suitable vehicle for European Investment Bank to lend funds to SMEs

“The Sparkasse Foundation for International Co-operation (SBFIC) has done an enormous amount of work investigating the potential establishment of a pilot public bank in Ireland.

“I understand that the Sparkasse Foundation are willing to offer considerable technical expertise and help mentor an Irish Pilot Public Bank – even to the extent of providing training and mentoring of staff in the pilot until it would be up and running.

“This would be very much along the model of how the American Credit Unions mentored the embryonic Irish Credit Union movement in the 1950s & 60s.

“Ireland has a great opportunity here to strengthen regional development with tried and tested expertise and assistance and I urge the Government not to squander the opportunity.

“I know that Irish Rural Link and Sparkasse Foundation have already met with the European Investment Bank, the SBCI and League of Credit Unions regarding piloting the idea in Ireland and it can be a template for financing regional development across the Eurozone.

“Certainly Ireland should be a priority for such a pilot given the serious challenge Brexit poses to the BMW region.

“I urge all interested groups, be they Credit Unions, Representative Bodies for Small Firms Associations, Agricultural Bodies and indeed political parties to fully engage with the consultation process before the deadline on Wednesday 29 March 2017”

ENDS

Notes about Community Banking:

An invite has been extended to interested parties to comment on a proposed new model of community banking. There is a Government commitment to investigate new models of community banking such as the Kiwibank model in New Zealand, or the German Sparkassen model of local public banks that operate within well-defined regions.

The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs is working with the Department of Finance to evaluate the community banking concept and is undertaking a period of consultation with relevant stakeholders in order to evaluate its viability within an Irish context.

The consultation process will run for 4 weeks until Wednesday 29 March 2017. Further details are available on the consultation section of the Department’s website, www.ahrrga.gov.ie. Submissions can be made online or emailed to Laure Garcia ([email protected]).

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