Joan Collins (Dublin South Central, Independents 4 Change) | Oireachtas source

The Irish banking system, based on for-profit private banks, failed disastrously in the financial crash of 2008 and 2010. The State was forced into a €70 billion bailout paid for with a decade of austerity, seriously impacting public services and, of course, a situation in which many homeowners lost their homes. This was a consequence of extremely risky speculative spending in a drive to maximise profits. Despite the bailout, we have since had the tracker mortgage scandal and there has been an exodus of foreign banks, leaving just two big banks now completely dominant in the State. One of these is AIB. It is effectively State-owned but continues to operate as a profit-driven private enterprise. There is an opportunity to transform AIB into a State-owned entity with a mandate to play a key role in the development of a sustainable economy through more strategic investment policies.

However, we also need a third banking force. The Public Banking Forum of Ireland has been arguing for such a third banking force since the crash, basing its ideas on the German Sparkassen public community savings banks. Four hundred of these public community banks account for 40% of the retail banking sector in Germany. They are key to the German SME sector, which is itself the key factor in the German economy. This is not a new idea in Ireland. In the early 1820s Ireland had as many as 65 community-based savings banks in its cities and larger towns. These savings banks were much like the early English savings banks of the 1800s, which were not much different from the German Sparkassen. The Public Banking Forum of Ireland proposes that credit unions co-operate at regional level to institute regional public savings banks in co-operation with An Post and local community organisations. The idea is to create ten regional alternative banks with a focus not on profits but on customers and lending to customers, small farmers and small businesses. This would address and counter threats to services in rural areas such as closures of post offices and so on.

I do not have time to develop these proposals fully, but the Government must look at this area.

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