Public Banking needs to be examined in an Irish context – O’Donnell

Limerick Fine Gael Senator & Government Seanad Spokesperson on Finance, Kieran O’Donnell will visit Germany early next week to see first-hand how the German Public Banks “Sparkassen” operate.

Senator O’Donnell will be part of a cross-party delegation from the Oireachtas Finance committee of which he is a member. The committee, on the invitation of the “Sparkassen” Public banking Group, will visit Germany and see first-hand how these public banks work in tandem with other financial institutions.

This delegation will also visit the ECB headquarters in Frankfurt to discuss the banking landscape in Ireland, including potential for a public banking model here and other related matters.

Senator O’Donnell said: “I believe that the Irish banking market needs further competition. The purpose of this fact-finding mission is to see the German public banks model “Sparkassen” in operation on a day to day basis.

“We will be evaluating whether such a banking model or a variation of same could work here and what it has to offer to the Irish consumer, including access to credit and rate cost.

“I am going to Germany with an open mind. Some of the specific questions I will have for Sparkassen include, how can they offer SME’s a 3% rate of interest for long term loans (when the rate here is higher at 5% on average) and home mortgages at 1.1% fixed rate of interest over 10 years(when the rate here is treble that figure).

“It is essential that we look at alternative models of Consumer and Business banking. The goal here is to ensure that reasonably priced financial services are offered to consumers while at the same time ensuring excellence in governance and oversight.

“Banking in Ireland is currently very expensive for customers compared to other areas of the EU. We need to tap into European expertise in the area when it was offered as such a model could be immensely beneficial to the Irish people.

“Also, I am interested to explore what roles Credit Unions and An Post could have in the provision of some form of public banking facilities here. The Irish Credit Unions have currently €7bn on deposit with the main banks.

“Our delegation will also be visiting the ECB headquarters in Frankfurt to discuss the Irish banking landscape, including the potential for a public banking model in Ireland as well as related matters.

“Our findings would then be made available to inform and feed into public policy and the Government’s on-going evaluation into how public banking concepts can be promoted in Ireland,” the Limerick Senator said.