Mr. Seamus Boland:

As members know, we have made a detailed proposal, which is available to be examined. What we are making very clear is that this is a bank. It is not-for-profit and has been developed on an Irish model. We are using the Sparkassen model as an example but we have asked the Department of Finance to look at how that model could be managed in an Irish context. That is why the stakeholders forum, which has been agreed by the Department and on which I believe Irish Rural Link and the credit unions would sit, should seek to examine how the model would look. I would strongly welcome the input of the credit union movement.

Irish Rural Link has made clear from day one that we do not see this proposal as in any way dampening the remit of the credit union movement, and nor should it. The credit unions could be very much part of this. I note the proposal made by Mr. Farrell this morning that a number of credit unions come together. We are clearly stating that the current banking model is not working, specifically for businesses in rural areas, as the banks will admit. For example, at a recent European financial forum the banks basically stated that larger accounts bring in more money, which makes sense, whereas a local partnership employing a few people is a much greater risk for them. In the days of the Agricultural Credit Corporation, ACC, and the Industrial Credit Corporation, ICC, the banks effectively allowed these two entities to manage those sectors of the market. In other words, we had a similar model previously when the ACC and ICC operated. They no longer exist and we now have a vacuum which needs to be filled. Perhaps the credit unions could do that but one thing is certain, namely, we need an alternative, not-for-profit public banking system. We have offered the Sparkassen model as an example. It is up to the Government and the people of Ireland to decide whether to implement that model or choose another model. That is our position. As I stated, our plan provides a specific model for each of eight regions. Each bank would cater for a population of 250,000 and they would all link into existing financial institutions as well.

There would not compete with the banks but addressing a niche market. As the Western Development Commission has shown, the number of small businesses in the west had declined by 4%. That is a problem and we cannot ignore the ongoing decline in small business formation. The issues are linked. Every year, the report of the Credit Review Office shows that loans are being consistently refused and the rate of refusal is the highest in Europe. Figures from the Irish Small and Medium Enterprises Association, ISME, show a 36% refusal rate, while other figures show a rate of 11%. Even the conservative figure of 11% is still the highest in Europe, higher than in Greece and other countries that are in serious trouble. We cannot allow that to continue.