In 2015, the Sparkassenstiftung für Internationale Kooperation (Savings Banks Foundation for International Cooperation - SBFIC), with the support of the Public Banking Forum of Ireland, submitted a proposal to the Department of Finance regarding the development of a local public banking system in Ireland. At that time, the proposal was considered in detail by officials in my Department and there was engagement with Sparkassenstiftung für Internationale Kooperation, the Public Banking Forum of Ireland and Irish Rural Link on the issue.
Local or public Banks, such as Sparkassen in Germany, focus on the needs of SMEs in their catchment area rather than profit maximisation. This is very similar to the business model of the Strategic Banking Corporation of Ireland. It is encouraging to note that to the end of June 2016, €347 million has been lent through the SBCI to 8,619 SMEs across Ireland in a wide variety of sectors and all regions. Additionally, the Government has to date delivered a number of initiatives that already support increased access to finance for SMEs such as: the Supporting SMEs Online Tool, the Credit Guarantee Scheme, Microenterprise Loan Fund, Local Enterprise Offices and the Credit Review Office. Given the significant SME supports that have already been put in place by the Government to support SME financing it was not clear, when my Department considered the proposal, how local public banks could create a distinct product offering that would avoid replicating both regional and national supports that are already available.
The current Programme for Government contains a commitment to investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions and the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs (DAHRRG) are the lead department in respect of this commitment. As the department with primary responsibility for this matter, they are now tasked with considering the issue further within the parameters of the Programme for Government.
