Monday 10 December 2018

'People's Bank' visit Fingal

German 'community bank' exploring Fingal as a possible location for a regional bank with a big difference

Senator James Reilly with Harald Felzen Sparkasse Public Bank
Senator James Reilly with Harald Felzen Sparkasse Public Bank

John Manning

Senior representatives of a German 'People's Bank' visited Fingal last week as they explored the possibility of setting up a regional bank here that would serve customers in the Dublin Fingal and Dublin West constituencies.

The Sparkassen Foundation is a banking organisation with a difference, operating with a 'public good' mandate that sees its regional centres invest in the local economy and the local community.

At the invite of an organisation in Ireland called Irish Rural Link, the bank have been investigating the possibility of introducing their banking model to Ireland and are planning to first open a regional centre in the Midlands and then open eight regional centres around the country.

Cllr Tom O'Leary (FG) has been pushing for Fingal to be the location of one of those eight centres and met, along with some of his party colleagues, senior representatives of the bank at council offices in Blanchardstown, last week.

Cllr O'Leary believes the bank could support local businesses with lending to the tune of some €250 million annually and said the 'community bank' had a 'great track record over 200 years'.

'They provide access to finance even in recessions at very attractive affordable interest rates,' Cllr O'Leary said.

He added: 'This is a banking model we want and need in Fingal to assist our entrepreneurs of all sizes.'

He said that banking model will help shake up the banking sector in Ireland, explaining: 'If this bank enters the Irish market it will provide real competition delivering loans of €1.5 billion to €2 billion annually to new businesses and existing businesses in Ireland. Bring it on.

Following the meeting in Blanchardstown, representatives of the bank appeared at the Joint Oireachtas Committee on Business, Enterprise and Innovation where Senator James Reilly put his weight behind the proposal.

Harald Felzen, European Project Manager for the Sparkassen Foundation told the committee that the bank was 'common good orientated'.

He said the banking sector in Ireland was 'dysfunctional' and that Sparkassen could provide better value for Irish customers.

Explaining the difference between Sparkassen and traditional commercial banks in Ireland, eh said the organisation 'not only has a banking role but a role to play in society'. He said the bank's performance was not only measured in profit but by its 'social, cultural and common good impact'.

Its regional centres have a mandate to 'contribute to the economic development of regions' and he said that by supporting 'the real economy', the bank had managed to avoid credit crunches.

The bank is a market leader in Germany in lending to SMEs, and has a 'relationship-based' way of dealing with its customers with decisions taken on loan applications locally and decided on 'by a banking advisor, not a rating system'.

Concluding his comments to the Oireachtas Committee, Mr Felzen said: 'We are deeply convinced that a Sparkassen model for Ireland could improve the banking landscape in terms of costs, services and social responsibility, fundamentally.'

Senator James Reilly declared himself 'a fan' of the model and said he was 'very impressed' with the bank's record.

He said the bank's low lending rates were in 'stark contrast' with what the commercial banks are doing in Ireland and he said it was 'powerful' that the bank insisted that its regional banks serve only that region and reinvest in that region.

Senator Reilly said he would welcome the Sparkassen model which he feels has a role to play particularly in the SME sector. He made the point that loan rejections for SMEs in Ireland are on the rise, and this new model could help address that problem.

Senator Reilly said to the Sparkassen representatives: 'Local, small SMEs, who are the driving force of our economy at the end of the day, could really benefit from your presence here.'

He added: 'The local community will be delighted to see money reinvested in the local community.'

Senator Reilly said he was 'hugely supportive' of the proposal and urged the Government to consider the idea, saying he wanted a 'positive response'.

He said Sparkassen's presence in the market would help 'give our communities a little control back over their own destiny'.

There are a number of hurdles still to be cleared before Sparkassen is allowed into the Irish market.

A report is currently being compiled on the proposal by the Department of Finance and that will then be considered by the Government.

Locally, the idea is being examined at council level too. Some preliminary talks have taken place between the bank and council officials and the Economic Strategic Policy Committee is assessing the potential of the Sparkassen Foundation model for Fingal.

Should the bank be permitted to bring its model to Ireland, it is also likely that they would establish a training academy here to train staff on the operation of their community banking model.

Cllr O'Leary emphasised the benefits of the model for the community, saying: 'Profits are reinvested in the community in the Sparkassen model - it's a community bank'. He added: 'There are no shareholders or dividends in the Sparkassen model.'

The local councillor concluded: 'That's what Fingal needs - the pumping of €250 million into the region to assist our residents and businesses.'

Fingal Independent