Grace O'Sullivan (Green Party) | Oireachtas source

I welcome the opportunity this debate affords us to examine the financial services landscape in Ireland and the need for An Post to provide services for a new generation of customers to whom traditional postal services appear irrelevant. There will be a great temptation to see the Kiwi post bank system, which we have heard about here, not just as a solution to the future threats faced by An Post but also as a solution to the dominance of the commercial banking system we are unnecessarily encumbered by in Ireland.

In the 2011 report by the commission of investigation into the banking sector in Ireland, Professor Peter Nyberg stated:

In explaining the simultaneity of the failures in Irish institutions, the Commission frequently found behaviour exhibiting bandwagon effects both between institutions (“herding”) and within them (“groupthink”), reinforced by a widespread international belief in the efficiency of financial markets. Based on this, the Report finally offers some lessons that could help avoid future similar occurrences in Ireland and elsewhere.

Herding and groupthink are still strongly in evidence in Irish banking, and a challenging and competitive new model is required here, not just another private commercial bank that disrupts for a while and then leaves again. What is needed is a bank that is culturally different, a bank that accompanies a loan to a business with real support and financial guidance throughout the term of that loan, that puts money into public works and, ultimately, that does not see profit maximisation as its reason for existence. Such banks do exist, as the Minister knows. They are publicly owned so they have no shareholders — only trustees — and they exist, therefore, to build up regional economies.

The Green Party supports an expansion of the financial services being offered by post offices, including banking services. Indeed, we see it as inevitable that such a development will happen. It would give customers the opportunity to take their business away from their current bank, based on return on savings, cost of loans and general banking charges. It also seems to us, however, that the institutions most impacted by such post banks and the additional competition they would bring to the market would be the credit unions rather than commercial banks. In this regard, a comprehensive analysis paper from the Department of Finance and the Central Bank would be a welcome addition to the Minister's proposal today.

The equally pressing issue of restructuring the banking landscape in this country must be restated. Postbanks are not equipped to become the regional economic driver that strong savings and loans banks in public ownership and operating as key lenders to SMEs in the €50,000 to €500,000 space, can be. Such a proposal to create a true third force in Irish banking will indeed challenge the commercial banks, which currently compete primarily to satisfy shareholders rather than stakeholders, and which continue to gorge on mortgage and business loan rates.

The regional public banking model would also enjoy the advantage of public ownership in perpetuity. Demutualisation will not happen in the event that they are established, or even in the event of the sale of shares to private institutions, as happened with Kiwibank in 2016. Profits will not be used to give shareholder dividends but, rather, will be put back into core capital and into public works, potentially for local authorities, which may act as the legal trustees of the institutions, as is the case with Germany's Sparkasse banks.

I understand that a very significant offer of technical support from the public banking network in Germany is currently on offer to the offices of the Minister for Rural and Community Development, Deputy Michael Ring, and the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty. This would facilitate the creation of a working group to engage on a detailed design for the establishment of six or eight regional banks around Ireland. These public institutions would be availing themselves of savings from the local and regional population to lend only to SMEs in the region, thereby capturing local wealth created and recycling it as future loans and interest on local savings. The potential for regional growth is evident, at a time when we are trying to grow our regions through the national development plan. Public banks would act as the perfect tool to make real the vision of more balanced growth around the country. I urge the Government to make a decision on this working group offer, and I hope it can support the public banking system while also delivering for the post offices.