Oireachtas Joint and Select Committees

Thursday, 12 October 2017

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Banking Sector in Ireland (Resumed): Savings Banks Foundation for International Cooperation, Irish Rural Link and Public Banking Forum of Ireland

9:30 am

Photo of Pearse DohertyPearse Doherty (Donegal, Sinn Fein) | Oireachtas source

These will be my final questions because many of the other topics have been discussed. The mortgage rate issue is very interesting, but obviously the rates of a new Sparkassen model in Ireland will be unique to the circumstances of this country. I take this as a starter, just in case anybody thinks we will be giving out loans at 1%. We would love to see it, but let us not get carried away with ourselves at the start. We have established a banking corporation company. It is not a bank and does not have a banking licence, although it is called a bank. It is a non-lender and money comes from the KfW in Germany to help it.

It has assisted business and will assist farmers, in particular in respect of the last round. It is a non-lender to banks, however, because I presume it does not want to deal with state aid complications. The pillar banks will claim that they are lending to SMEs and that their books demonstrate this, but if public money goes into a new public banking model and the pillar banks are not delivering to the market in the middle, how do we stave off a challenge under state aid rules on the grounds that we are distorting competition? Is it that all the capital will be raised on the private markets?

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