Galway TD calls for Dáil Committee to design ‘third banking force’ for Ireland

Galway TD Denis Naughten is calling for a cross party Dáil Committee to design a state backed “third banking force” in Ireland that would take advantage of existing infrastructure in credit unions and post offices.

Deputy Naughten said that the current banking model in Ireland does not properly serve personal customers and small businesses, and that the state should get more involved in the banking sector.

This comes after KBC Bank announced that it is planning to shutter its presence in Ireland, and is currently in talks with Bank of Ireland to sell off its loan assets.

Just last month Ulster Bank also announced that it is planning to wind down its presence in Ireland over the next year.

These two closures, combined with Bank of Ireland’s decision in March to permanently close more than 100 branches across all of Ireland, including three in Galway.

Denis Naughten said that a “new banking model” is needed, pointing out that 13% of people in the country do not use online banking, and that even a “simple service” such as 24 hour ATM access for lodgements and withdrawals “would make a big difference in helping these towns recover after Covid.”

“Unless this agenda is politically driven on a cross party basis, then I believe it is doomed to failure because the reality is that the financial establishment, in all its guises, does not want a third State co-ordinated banking force that will actively compete with the two existing banks.”

“There is no doubt that there is an absolute mindset block against State involvement in the banking sector. Surely if Covid has taught us anything it is that when it is needed ways can be found for State intervention in the long-term public interest.”

He said that there is already a “comprehensive branch network” in place to serve personal customers through post offices and credit unions.

An analysis of the possibilities of community banking in Ireland published by the Department of Finance back in 2019 found that, even before recent developments, more than half of the country’s post office branches were in locations where there was no commercial bank within 5km.

When restricted to areas outside of Dublin, this level went up to more than 60 percent.

The report also noted that credit unions were already making significant inroads into community banking, with level of lending by credit unions in Ireland increasing from €1.7 billion in 2014 to €2.5 billion in 2018.

Deputy Naughten added that for small to medium businesses, state banks already exist in the form of Strategic Banking Corporation of Ireland and Microfinance Ireland.

“So rather than trying to reinvent the wheel, we need to build on these key strengths and design an economic strategy for rebuilding our economy through our local businesses which are so important to recovery outside our cities.”

“Before the pandemic 250,000 SMEs accounted for 99.8% of total enterprises and 65% of total employees. SMEs are the backbone of the country and it is vital that they get up and running again but they will need supports.”

“They have been the backbone of communities across the country and can be once again, with the right backing.”

“We also need to see a far more competitive mortgage market and we also need to have access to cheap green finance for homeowners and landlords to make existing homes far more energy efficient.”