Written answers

Wednesday, 31 March 2021

Department of Finance

Community Banking

Photo of Jennifer Murnane O'ConnorJennifer Murnane O'Connor (Carlow-Kilkenny, Fianna Fail)
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388. To ask the Minister for Finance his plans to support a community banking system in Ireland; and if he will make a statement on the matter. [17331/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy may be aware, my Department published a paper in December 2019 by Indecon Consulting on an Evaluation of the Concept of Community Banking in Ireland. This was a follow on to a previous paper on Local Public Banking published by my Department in 2018.

The Indecon report concluded that there is no business case for the State to establish a community banking system in Ireland, supporting the outcome of the previous report on Local Public Banking. The report notes that the Exchequer costs and risks involved would not be justified by the analysis of the causes and extent of market failure. The report also notes concerns over the ability of a new State owned bank to provide effective competition.

While Indecon’s report concluded there are some areas of market failure, it noted that there is extensive provision of and access to banking services through bank branches, credit union offices and An Post branches, as well as a wide range of Exchequer funded existing supports.

Notwithstanding recent announcements in the banking sector, this continues to be the case.

The Indecon report looked at the credit union sector, and concluded that credit unions are considered to be a ‘community bank’. Credit unions are a key provider of financial services throughout Ireland with assets of €19.6 billion and loans of €5.1 billion, and are continuing to expand the range of services they provide. The Government is supportive of the Credit Union movement growing as a key provider of community banking in the country.

The report also looked at An Post, noting that it was increasing its financial offerings and that there is a significant network of post offices in areas where there is no bank branch within five kilometres. An Post offers counter services for AIB, allowing customers to lodge and withdraw cash at An Post branches. Bank of Ireland has announced a new partnership with An Post to provide a range of banking services.

There are a wide range of models in the delivery of financial services in the State. These are being augmented all of the time, particularly in the area of online and phone app banking services. Complementing these wide range of models, we have huge diversity in the ownership of firms delivering retail services. Ownership ranges from shareholders, both domestically and internationally in the case of credit institutions and retail credit institutions, to community ownership in the case of credit unions.

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