The Central Bank's views on Credit Union mortgages and Sparkassen

Brendan Burgess

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From the Central Bank's appearance before the Oireachtas Finance Committee

Chairman: It might also include the Central Bank examining the recent report published by this committee on the credit union sector. The witnesses might let us have their views on the report and on community banking. If the bigger operators, the commercial banks, are not going to service local communities in the way a Sparkassen bank does in Germany, perhaps the time has come for the Central Bank to look favourably upon the credit union sector and the provision of mortgages and community banking through the credit unions. That is where we are going with this in respect of the big banks now.

Mr. Ed Sibley: I will respond on those two points. I have looked at the work of the committee on credit unions and have studied the report carefully. We see some degree of overlap with the work of the credit union advisory committee, CUAC, implementation group, of which we are a part. It is a very important area and probably warrants a separate discussion. Certainly, I will be happy to return to the committee with the registrar to have a discussion of our view of the credit union sector, the issues we see in that sector and how it needs to move forward. We are doing a great deal of work on business model development. We issued a paper last year providing guidance on longer-term lending and we are looking at the rates relating to longer-term lending. We have also done work on the investment guidelines. There is a rich seam of conversation to be had on that and I am happy to have it.

Chairman: As part of that conversation, perhaps Mr. Sibley would write to us about the Central Bank's views on the report.

Mr. Ed Sibley: Certainly.

Chairman: We are having a round-table discussion with all the stakeholders about community banking and credit unions to see if we can further the establishment of community banking in Ireland. In that regard, it would be interesting to have a discussion with Mr. Sibley and the registrar.

Mr. Ed Sibley: I am happy to do that. With regard to the Sparkassen, I met representatives of Irish Rural Link and the Sparkassen in the past couple of weeks. They are very clear about the approach they wish to take, which is a full banking licence and a full banking model. We have a clear authorisation process and we are happy to work through that. As I understand it, the issue is not about the authorisation process or the work of the Central Bank but funding the capital for whatever they wish to do. Sparkassen are operating as consultants but in order to operate a bank here, they must fund it. The costs associated with building infrastructure must be found. In terms of any engagement or progress that must be made in that regard, there is a process we are going through repeatedly with Brexit at present in respect of the authorisation process. We are happy to engage on it, but it would be as part of a banking licence application. That obviously requires the funding and the capital to do that, which is not a matter for us.
 
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