Opinion: Imagine a bank that's there for the public good, the stakeholders not shareholders and is loyal to its region
"But there's nothing so lonesome, so morbid or drear than to stand in a bar, of a pub with no beer."
Although inspired by the Australian outback, this song could be sung in any rural town and village in Ireland and the words would be sure to echo off the walls of at least one hostelry with no beer.
At the top of the hill in our village there is a pub, and like many a similar establishment in rural Ireland, it is closed. There are weeds growing along the front, the paint is peeling off the door and there's a 'For Sale' sign nailed to the wall. Meanwhile, locals wanting to slake their thirst in convivial surroundings will need to find transport to an establishment at the other end of the parish. I suppose people could walk but they would need want to be young, fit and profoundly thirsty.
Our pub-with-no-beer is located on a busy road and I'm sure many a local entrepreneur looks at it and wonders 'should I, would I or could I' - 'should I try my hand at the business, would I have the custom to make it succeed and where could I get finance'.
The answer to the first question can only be answered deep inside the entrepreneur. The second question depends on the kind of business model the prospective publican adopts. While the day of the traditional pub serving only pints and small ones is gone, nowadays it is acceptable to sit on a bar stool at 11 o'clock at night and ask for a cup of tea without running the risk of being barred for life. Indeed, one could call for a skinny latté without having one's sanity called into question.
The nub of it all is in the third question, 'where could I get the finance?" The prospective publican could go to the local credit union. It has millions in local savings and would love to help but is prohibited from giving business loans.
So, barring a legacy, a lotto win or the proceeds from the sale of a matchbox on Shrewsbury Road, the gallant entrepreneur will have to turn to what are called the 'pillar banks'. Pillar banks indeed, after the financial collapse of 2008 they turned into pillars of salt.
Any entrepreneur approaching theses pillars for money to buy and develop a boarded-up pub would need to be well prepared. He or she could be asked to produce the deeds of the ancestral home, census returns from 1601 and financial projections into the next millennium. Not to mention a risk management programme (RMP) detailing how they will handle all possible risks up to and including a return of the Ice Age.
But let's imagine. What if there was a bank that looked beyond the bottom line, or a bank with a different definition of a bottom line? A definition that takes into account a range of variables such as the well being of the community, the need for decent social infrastructure and the public good that would be realised if people with initiative flair and style could blossom in their own community?
What if there was a bank that doesn't just ask you to come in and talk to them about your mad notion to buy a pub but sends someone out to walk the land, talk to the neighbours, visit the schools and drink tea with people. What if the bank was open to the notion that this community could do with a hostelry, a hub or a haven where people could gather for everything from funerals to fiftieths.
Such a bank is called a public bank, it is there for the public good, it is there for its stakeholders not its shareholders, it is regionally based, it is loyal to its region and it makes local savings work for local people and local communities.
Such a bank exists in Germany and has been doing this kind of thing since the 18th Century. When Germany's 'pillar banks' wobbled and tottered during the financial crisis this one, the Sparkassen (Savings Bank), stood firm because it is grounded in the local.
Sparkassen actively seeks to export its model and offers massive training and support for its development. It has exported itself successfully to the most underdeveloped countries. Here in this country it has been working closely with Irish Rural Link (IRL) to bring the model to Ireland but the Central Bank, the Department of Finance are very slow to engage.
Since Jean-Claude Trichet told the late Brian Lenihan not to let any Irish bank fail, Irish governments have poured billions into the pockets of the pillar banks. Not only that, the politicians and officials have jumped into the same pockets and remain there.
Recently, IRL and Sparkassen are meeting the Oireachtas Finance Committee to put the case for opening the banking sector to public banking. They reminded the politicians that public banking is nothing new in Ireland as the Agricultural Credit Corporation (ACC) and the Industrial Credit Corporation (ICC) were essentially public banks. They will point out that the development of the Sparkassen model of banking with its regional focus would be a vital component in developing balanced regional development where rural money saved locally would be put to work for people in their own areas.
Maybe the government will listen to IRL and to Sparkassen and perhaps we will have cause to toast them all in pubs with beer, tay and maybe even the occasional skinny latté.
Sparkassen (Savings Banks) were established in the 18th century to provide all citizens, including those on low incomes, with the opportunity to deposit their savings safely.
They are independent entities under a public mandate and follow the 'regional principle,' in that each one services a clearly defined business area. The local focus helps them develop products and services matching local needs.
They are not privately owned but are privately managed under local trusteeships that include local government representation and are run by licensed bankers.
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