Kieran O'Donnell (Fine Gael) | Oireachtas source

I thank Mr. Sibley for his comments. One of the reasons that this session has arisen is because a delegation from here visited Germany a number of weeks ago, in particular to assess the Sparkassen model.

We looked at the operation of Sparkassen. We met officials from Sparkassen in their headquarters and we went to Lüneburg where one of the Sparkassen banks are located. Several features struck us. First, they had an old-style type of banking. Trainees come in from school and do in-house examinations. It was like the banking system here years ago. There is heavy orientation, in-house training, courses and banking examinations. The model is based on a low-risk model. These banks charge a percentage on top of the cost of funds from deposit-holders. They are not publicly owned as such. That is something of a misnomer. They are regionally organised - that might be a better term. Ultimately, the beneficial interest will return to the municipal authority in the region. There are many attractions to the model in that they are prohibited by law from engaging in speculative lending. They are regionally based. We met members of the public in Germany and I did not meet one German who had a negative view of Sparkassen. They have Landesbanken as well - that is a separate issue.

I want to deal with the credit unions and post offices. I am not looking for a State bank but I am looking for a public bank. The credit unions and the post offices provide a network. The post office is ultimately State-owned while the credit unions are not.

Mr. Sibley made one point that struck me in particular. He said that a survey undertaken by the Department of Finance showed that those seeking microfinance experienced higher rejection rates than other small and medium-sized businesses. I would have thought there was scope within the model and regulation of credit unions to fill the void where small and medium-sized business lending should be. I note that An Post has made reference to bringing a partner on board for home loan lending. What if the credit unions provided a back-office national facility whereby loan applications would come and be adjudicated upon? It could operate a little like the Housing Finance Agency. I know the agency is doing that role in some form for home loans. How does the Central Bank view that idea?

I have a particular personal view that we need another pillar. I believe we need a public banking pillar. What would be required, on the face of it, from a regulation point of view to allow the credit unions to move into that sector? The Central Bank could put limits on the level of small and medium-sized business lending. The credit unions have a network, staff and credibility with the public. They are similar to Sparkassen in Germany in that way. Will the Central Bank officials give me their perspective? I am trying to flesh out what the regulators would look for to allow the credit unions in particular to move into this sector from a prudential viewpoint. I note An Post is going into the home market as well.