‘Need for a new public banking system’ claim by Leonard

A vision for a new bank that would fill the gap created by the closure of branches in rural towns was laid out before members of Westmeath County Council at their February meeting by Labour member, Cllr Denis Leonard.

Cllr Leonard proposed that the council write to the Minister for Finance requesting "immediate action using the expertise available" to design and implement a comprehensive regional public banking system that would make full use of the remaining financial services institutions in towns like Kinnegad, Moate and Castlepollard as well as in TUS Athlone.

Lamenting what he termed the "massive reduction in banking competition", Cllr Leonard said there are now only three retail banks in the Irish Republic, which has also witnessed the demise of public building societies and credit corporations and a lack of support for the notion of allowing the Irish credit union movement to expand.

This new type of system should, he argued, deliver "an essential local banking service" to local communities and businesses that would augment the work of the post offices and credit unions and give local people and businesses real finance and borrowing options in order to keep local towns thriving.

"What I’m asking is that we look at a business model of profit maximisation; regionality of these banks, a decentralized network structure. The focus needs to be on servicing small and medium-sized enterprises; it needs to be stakeholder-orientated – not stakeholder-driven," he said.

Speaking of the impact of the bank and bank branch closures in Westmeath, Cllr Leonard said that everything has now been moved to either Athlone or Mullingar, which was less than ideal: "We have two choked towns and everything coming into them," he stated, saying that at the very least, in the interest of climate action, services need to be restored in Kinnegad, Moate, TUS and Castlepollard.

Cllr Leonard reminded colleagues that they had written to the finance minister in May 2021 on foot of the closure of the Bank of Ireland branches.

"We were told that the gaps in the banking services would be filled by the post offices and credit unions. That hasn’t happened to date because the report was written before the withdrawal of Ulster Bank and KBC and of course the closure of 80 plus bank offices across the country," he stated.

Cllr Leonard was disappointed that the proposal of creating a public bank was examined, but ruled out on the basis that it would be pitted against – and might possibly replace – credit unions, a view he rejected: "In fact, a regional public bank could actually help the credit unions, who currently are forced to deposit millions in the remaining pillar banks instead of investing in the real economy," Cllr Leonard argued.

He suggested there would be benefits all round if credit unions had an option to deposit their excess funds in a bank specifically set up for local SME businesses and regions: "I’m sure all of us here have experienced examples in our constituency of individuals or businesses that have experienced problems with the lack of financial services available locally, and the impossibility of getting an actual human to talk to about their financial needs," he stated.

Cllr Leonard said what he is proposing isn’t an entirely new concept: ICC Bank and ACC Bank fulfilled this role in the past, and the expertise is available through the Sparkasse foundation.

Support came from Cllr Hazel Smyth, who said that with the exit of many of the major banking institutions from the Irish market and the closure of bank branches nationwide, the options for Irish bank customers have become "increasingly limited and rather bleak".

Cllr Smyth said that despite the community orientation of An Post and the credit unions, and the "excellent services" they provide, neither of those options provide the full-service banking alternative sought by Irish customers.

She said a new-model public bank developed in Germany now has 12,000 branches: "As the public bank is owned by general public, they focus not on creating shareholder value but supporting the local community and projects that support the local people, environment and economy," she said, adding that this type of bank operates within defined geographical boundaries, which creates a close knowledge and awareness of the needs of the local community within which the institution operates.