Ex­ploratory talks be­tween credit unions and Sparkasse bank could be held ‘within weeks’

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE - Fearghal O’con­nor

EX­PLORATORY talks on a po­ten­tial part­ner­ship be­tween Sparkasse and Ir­ish credit unions could be­gin within weeks, af­ter the Ger­man com­mu­nity bank promised it could in­tro­duce low in­ter­est rates for both mort­gage and SME bor­row­ers.

Oireach­tas fi­nance com­mit­tee chair John Mcguin­ness told the Sun­day In­de­pen­dent that he has is­sued an in­vi­ta­tion to credit union of­fi­cials — as well as An Post — to meet the Ger­man bank to dis­cuss its pro­posed new Ir­ish bank­ing model.

The Fianna Fail TD said he had spo­ken last week to credit union of­fi­cials who were open to the idea of join­ing forces with the Ger­man bank.

Sparkasse — a not-for-profit bank with €1.1trn in as­sets — has pro­posed es­tab­lish­ing eight re­gional pub­lic banks in Ire­land, start­ing with a pi­lot bank in the mid­lands with up to five branches.

The mid­lands bank would have a cap­i­tal need of be­tween €15m and €20m, with the en­tire net­work of eight sep­a­rate banks cost­ing be­tween €150m and €200m, said a se­nior Sparkasse ex­ec­u­tive.

“I do not see any rea­son why mort­gages in Ire­land should be more ex­pen­sive than in Ger­many,” said Ni­claus Bergmann, manag­ing direc­tor of Sparkasse’s in­ter­na­tional arm. In Ger­many, Sparkasse of­fers long term SME loans at 3pc in­ter­est rates and 10-year fixed mort­gage rates of 1.1pc.

“We are talk­ing about com­pet­i­tive in­ter­est rates. We have an ap­proach which is not share­holder-value driven. It is not about earn­ing money but ful­fill­ing a task,” he said.

But Bergmann also made it clear that Sparkasse’s role was to pro­vide ex­per­tise rather than to put up the re­quired fund­ing. Mcguin­ness said he had dis­cussed the plan with se­nior peo­ple in the credit union and that they are “open to the idea”.

“If the credit unions de­cide that this is a good idea they could cap­i­talise any one of those banks. The credit unions have a fund of €7bn that is de­posited in the main banks at the mo­ment and that could be used to cap­i­talise any of the Sparkassen type banks around the coun­try,” he said.

Mcguin­ness said he hoped the pro­posed meet­ing could “move things for­ward” and that the next step could be to bring the Depart­ment of Fi­nance and the Cen­tral Bank to the next meet­ing.

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