Sparkasse - political resistance to new entrant to Irish mortgage market

Discussion in 'The Fair Mortgage Rates Campaign' started by CiaranT, Aug 27, 2017.

  1. CiaranT

    CiaranT .

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    Last edited: Aug 27, 2017
    According to the Sindo:

    -Sparkasse, the biggest bank in Germany, wants to create an alternative to the major commercial banks, particularly in regional towns.
    - The European Investment Bank has indicated support for the €200m project.
    -Sparkasse, which issues half of all German mortgages at rates well below standard Irish rates, believes Ireland is ideal for its municipality-owned, non-profit model.
    - No approval from the CBI yet. DoF are refusing invitations to see Sparkasse model.
    - DoF say next step is report on community lending.
     
    Last edited: Aug 27, 2017
  2. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Aug 28, 2017
  3. Brendan Burgess

    Brendan Burgess Founder

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    Does this model require the approval of the Department of Finance?

    Are they being asked to fund it?

    I had assumed that if Sparkasse wanted to enter the Irish market, they would only need the approval of the Central Bank. In fact, they could passport in without that approval, I think.

    Brendan
     
  4. Brendan Burgess

    Brendan Burgess Founder

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    Harald Pelzen, Sparaksse Project Manager made a presentation here:

    It's mainly to do with rural banking, rather than mortgages.


    upload_2017-8-27_10-38-10.png
     
  5. Brendan Burgess

    Brendan Burgess Founder

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    So they would need to change legislation to accommodate their model. So the Minister can refuse to facilitate them.

    Brendan
     
  6. newtothis

    newtothis Frequent Poster

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    I have to say, the following brought a very wry smile "Idiosyncratic aspects of the Irish banking system may pose special challenges".

    Talk about understatement!

    At least they're approaching with their eyes open.....
     
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  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    If true, this is a disgrace.

    The State is utterly conflicted and should be compelled (by the EU) to dispose of its shareholdings.
     
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  8. odyssey06

    odyssey06 Frequent Poster

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    I don't think Sparkasse are putting any money into it, the funds are coming from the European Investment Bank.

    Hopefully articles like that in the Sunday Independent might bring some pressure on rural TDs to being the Dept of Finance to their senses.
     
  9. CiaranT

    CiaranT .

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    The Sunday Independent article is now, finally, online here.
     
  10. Dauhee

    Dauhee Frequent Poster

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    Last edited: Aug 28, 2017
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  11. Jim2007

    Jim2007 Frequent Poster

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    Oh yes because pouring cheap credit on an over heating market worked out so well for Ireland the last time around! Now we need someone to claim but it is different this time around and how it could not possibly happen again!
     
  12. LS400

    LS400 Frequent Poster

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    Oh, so were being thought a lesson then.
     
  13. odyssey06

    odyssey06 Frequent Poster

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    Are you implying that in the absence of the Irish Central Bank being able to set our interest rates, the Irish government are deliberately encouraging lack of competition in Irish banking sector in order to keep interest rates high??? I think that's a mis-overestimation of their abilities!

    Note that the ECB rate was 4% in 2007... what should it have been in your opinion?
     
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  14. Jim2007

    Jim2007 Frequent Poster

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    Nope, I suggesting that people have a very short memory and have already started on building themselves another bubble and heaven forbid that anyone should stand in their way. It does not mater what excuse is used to introduce another block of credit into the market in the end it will only have the same impact, add fuel to the fire.

    But of course this time it's different right, it's adding competition to the market, so how can that possibly go wrong.
     
  15. Brendan Burgess

    Brendan Burgess Founder

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    Hi Jim

    I don't think that the throwing fuel on the fire argument is correct.

    Ten years ago, there were 100% mortgages and 6 times people's earnings. And the interest rates were a lot higher than they were now.

    Now, the Central Bank regulations require a minimum deposit of 10% (20% for second time buyers) and 3.5 times earnings.

    So if Sparkasse enters the market, the volume of credit will not increase.

    The price will fall which might make people pay a bit more for houses, but they will quickly hit up against the Central Bank limits.

    And the Central Bank has said that it will review the limits if the market gets out of hand.

    So, this time, it is actually different. :)

    Brendan
     
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  16. CiaranT

    CiaranT .

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    Sparkasse are in talks with An Post. An Post may service Sparkasse product. Source: Sunday Business Post.
     
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  17. TheJackal

    TheJackal Frequent Poster

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    Interesting. Postbank didn't work and only lasted from 2007 to 2010, but that was in the middle of the recession