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Banking Sector

Dáil Éireann Debate, Wednesday - 2 May 2018

Wednesday, 2 May 2018

Ceisteanna (24, 31)

Seán Sherlock

Ceist:

24. Deputy Sean Sherlock asked the Minister for Rural and Community Development the engagement his Department has had with credit union representative bodies (details supplied) regarding the future of the rural post office network and the public banking investigation; and if he will make a statement on the matter. [18903/18]

Amharc ar fhreagra

Alan Kelly

Ceist:

31. Deputy Alan Kelly asked the Minister for Rural and Community Development the engagement his Department has had with an organisation (details supplied) in respect of the establishment of a network of regional public banks here; and if he will make a statement on the matter. [18905/18]

Amharc ar fhreagra

Freagraí ó Béal (8 píosaí cainte)

It has been agreed that Deputy Penrose will ask the questions on behalf of Deputy Sherlock. I am sure nobody has any difficulty with that.

As the Minister knows, I have been pursuing this vigorously. I am eager to ascertain the status of the public banking investigation carried out by the Government. The Minister's Department and the Department of Finance have recently completed a report examining whether a model of community or public banking could work here. The Minister said it will be published in the coming weeks and that he is engaged with Irish Rural Link and the Savings Banks Foundation for International Cooperation, which is the international development wing of the German Sparkassen public banks. I am eager to ascertain what progress has been made. I acknowledge the Minister is on top of it and is supportive but I do not trust the Department of Finance.

I propose to take Questions Nos. 24 and 31 together.

The programme for a partnership Government includes a commitment to investigate a new model of community banking for Ireland, including an investigation of the German Sparkassen model for the development of local public banks that operate within well-defined regions.

A project team comprising officials from my Department and the Department of Finance was established last year to make progress on this commitment. The project team carried out detailed research into the concept of a public banking model, with a particular focus on the Sparkassen model. In addition, a public consultation process seeking views on the concept of a community banking model ran for four weeks. A range of key stakeholders were invited to comment on the proposed new model of community banking, including the credit union representative bodies. Members of the Oireachtas were also advised of the consultation process.

Two credit union representative bodies submitted very comprehensive responses describing the extent of their work and the impact they have on rural communities throughout the country. Their responses have been assessed in detail and their views will be reflected in the forthcoming report on the public banking review. Additionally, there has been substantial engagement and a number of meetings held with the body referred to by Deputy Penrose, who has been raising this for many years. The departmental officials have finalised their report and have submitted their findings to the Minister for Finance and me. The report will be brought to Government for approval in the coming weeks.

I thank the Minister but I am deeply concerned by the obstinate view of the Department of Finance. The German model of public banking falls between the private commercial banks that we are used to in Ireland and the credit union movement. These banks would offer the same kinds of loans as commercial banks currently offer but with more favourable terms. Clearly, the banks are not nationalised like AIB. The public banking model has existed in Germany for over 200 years. The banks are municipally owned and are not for profit. The clear objective is lending into the regional economy. Such banks would fill the void that has clearly been left behind by the pillar banks, which, as the Minister is aware and has heard in recent pronouncements, are rapidly disengaging from rural Ireland. All they are interested in is more technology and removing the human face from banking. The poor unfortunate bank workers, tellers and others who are left behind are absolutely overloaded. It is a disgrace. One has only to see what Ms McDonagh of Bank of Ireland and others in AIB have been doing in recent weeks to realise this. The general public remains sceptical about the mainstream banks. How could it be any other way when the sole focus is bringing back the discredited bonus system?

The Minister now has a chance to give the pillar banks a right booting because that is what they deserve. They are deserting the ordinary people of this country. This is a chance for us to fill the void.

I call the Minister. He should please keep to the time.

I thank Deputy Penrose. I want to be fair to him because he has been raising this for a long time. I really mean it when I say the report has been produced and will be before the Government in the next two weeks. The Minister for Finance, Deputy Paschal Donohoe, and I have read the report. We have to bring it before the Cabinet. We will publish it as quickly as possible after it considers it.

I agree with the Deputy on some of the comments he made. There is a problem and I am hearing every single day as a rural Deputy, not as a Minister, how banks are dealing with consumers. We do need a bit of competition in the market. Banks have certainly lost the sense of what they used to do and are certainly not there for the people anymore. They are there for themselves, not for the ordinary general public who need banking services. The banks no longer want to take cash and they do not want to give out loans. I do not know what they want to do any longer. There are many complaints. Small businesses are finding out daily that they cannot obtain the credit they need, nor can they get the supports.

The public banking model in Germany operates under municipal trusteeship. The salary ranges of Sparkassen staff are basically identical to the civil servant arrangements. Bonuses for staff are not common practice. Salary arrangements comprise a success story and there is customer satisfaction. The pillar banks here would not get a penny if it was based on customer satisfaction. They would not get a shilling. Some of the big managers would lose some of their wages. Bonuses for staff are not common practice in the German public banking model. Mr. Seamus Boland, CEO of Irish Rural Link, said this alternative system of banking would in many ways complement mainstream banking. It is important to relay to the bureaucrats in the Department of Finance, whom I know are the obstacle, that Mr. Boland states: "Failure to develop an alternative banking system on the lines proposed, will condemn our regions to being unable to develop in economic terms for the foreseeable future."

I know what the banks did during the hard times. They took away overdrafts of €5,000 and €6,000 from unfortunate small businesses and let them go to the wall. They looked after the big shots and the small people suffered. This is the void we are trying to fill. We want to take on the pillar banks through competition. Sparkassen, the credit union movement and the post offices are ready to do so. The Minister should complete the job.

All I can tell the Deputy is that we want to get this to the Cabinet. We want to get the report published. I would love to see more competition in the banking market. I will try to get my job done, get the report to the Cabinet as quickly as possible, have it published and then see where we are.

Question No. 25 replied to with Written Answers.
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