Michael Healy-Rae (Kerry, Independent)
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211. To ask the Minister for Finance if he will address matters (details supplied) with regard to the banking system; and if he will make a statement on the matter. [16615/17]

Michael Healy-Rae (Kerry, Independent)
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212. To ask the Minister for Finance if he will address an issue with regard to a group (details supplied); and if he will make a statement on the matter. [16616/17]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 211 and 212 together.

The Government has not ruled out introducing a Community/Public Banking model. The Programme for Government commits the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs to thoroughly investigate the German Sparkassen model for the development of local public banks that operate within well-defined regions. It also calls for the investigation of a new model of community banking that could provide a suite of banking services through the Post Office Network, such as the Kiwibank model in New Zealand, where the Post Office-owned bank provides a comprehensive suite of financial services, from personal loans and bank accounts to credit cards, business banking, and insurance. 

The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs have undertaken a period of consultation on this matter. The consultation closed on 29 March.  

The Department of Finance is working closely with the Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs on this matter, and has attended a number of meetings with interested parties, on the request of the lead Department. One of these meetings was with the Public Banking Forum of Ireland.

The Department of Arts, Heritage, Regional, Rural and Gaeltacht Affairs, assisted by the Department of Finance, will be producing a report for both the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs and the Minister for Finance setting out their conclusions on the investigation into Local Public Banks. This report is expected to be completed by the end of May 2017.

Michael Healy-Rae (Kerry, Independent)
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213. To ask the Minister for Finance if he will address a matter (details supplied) with regard to privately owned commercial banks; and if he will make a statement on the matter. [16618/17]

Michael Noonan (Limerick City, Fine Gael)
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I would not agree that the commercial banks enjoy a monopoly on what I understand you refer to as "credit creation". One of the roles of credit unions for example is the creation of sources of credit for the mutual benefit of its members at a fair and reasonable rate of interest.

Within the Credit Union sector, total lending has contracted since 2011 with total sector loans (before provisions) falling from €5.7bn in 2011 to €4.1bn in 2016. Total sector loans (net of provisions) have fallen from €5bn to €3.6bn over the same period. The average sectorial Gross Loan to Asset (LTA) ratio has fallen from just over 40 per cent in 2011 to 27 per cent in 2016. This is in the context where total loans to Irish households (consumer credit) have contracted from €17bn in 2011 to €12bn in 2016. Credit unions have maintained a circa 34 per cent share of this type of lending during the period 2011 to 2016.

Lending restrictions on specific credit unions are imposed in the context of on-going matters of supervisory concern arising in individual credit unions. Currently circa 24% of Credit Unions are operating under lending restrictions. For those credit unions where there is an individual loan size restriction in place, the level at which the limit is imposed ensures that the vast majority of those credit unions can continue to make loans significantly more than the average loan for the sector of just above €6,000.

Under the terms of the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, an individual member savings limit of €100,000 applies. The Regulations also provide that credit unions could apply to the Central Bank to retain individual members' savings in excess of €100,000, which were held at commencement of the Regulations and that individual credit unions with total assets in excess of €100m could apply to the Central Bank for approval to increase individual member savings in excess of €100,000.

In recognition of the important role of credit unions as a volunteer co-operative movement in this country and my support for a strengthened and growing credit union movement, the Central Bank has agreed to an accelerated review of the savings limit.

In relation to the assertion that some banks have 'monopoly control over the payments system', the Central Bank has sole responsibility for the domestic retail paper-based clearing system, but is not the primary overseer for the pan-European/external systems used for electronic payments and card payments, and for securities settlements. In addition, Banking & Payments Federation Ireland is the strategic, representative, administrative and payments system integrity body for the payments industry in Ireland.