DUBLIN, Ireland–At the same time Ireland’s credit unions continue to fight for a stronger market presence in this country and to expand into mortgages, a major German bank that is also a non-profit wants to bring its model to the country, saying it believes it could play a role in solving Ireland’s housing crisis.
The bank has also expressed an interest in partnering with credit unions in some ways.
Sparkasse, the biggest bank in Germany, wants to create an alternative to the major commercial banks, particularly in regional towns, according to The Independent.
The European Investment Bank has indicated support for the €200m project, said Sparkasse. That support is conditional on the proposal receiving political backing in Ireland, according to The Independent. But so far, that backing has been slow to materialize, the publication reported.
“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,” The Independent stated. “The 200-year-old bank is aimed squarely at SMEs and the middle segment of the market. In Germany, where it has 300,000 staff in hundreds of branches, it is part-owned by each local authority. Each regional bank operates and lends in its own area but is backed by a central organization providing shared services, IT and banking transaction support.”
The Independent reported that “supporters of the proposal believe it would provide an ideal middle ground between the troubled credit union sector and the two big Irish commercial banks…Indeed, Sparkasse has proposed to the Irish League of Credit Unions that they could avail of the central shared services system if it is established.”
Invitations extended by the German bank to the Departments of Finance and Rural Affairs to see how it operates in Germany have so far been turned down, according to the Independent. Both departments told the Independent the idea will be dealt with in a report which is being prepared.
Sparkasse would have no financial interest in the Irish off-shoot but would provide support for its establishment, according to The Independent.