LONDON–German bank Sparkasse plans to establish a €30-million pilot project in Westmeath and Fingal in Ireland., with each area partnered for support with an individual not-for-profit regional bank in Germany, according to a new report.
Both local banks and credit unions are expressing concern over what the plan might mean to their futures.
As CUToday.info has reported, Ireland’s credit unions had already been in exploratory talks on a potential partnership with Sparkasse related to mortgage offerings.
Now, according to the Independent, any plans by Sparkasse to pursue the pilot finance projects hang on a key report into community banking models that is with Department of Finance officials and expected to be published soon.
“Supporters of the model argue that, because it does not need to make a profit for shareholders, it could charge low German-style interest rates on mortgages and business loans,” the Independent reported. “Sparkasse would provide expertise and support but the €30m initial funding would need to come from State resources.”
Should the report be favorable toward the Sparkasse-type model, there are plans to establish a stakeholder group to prepare a funding model and adapt it to Irish regulations and culture, a source told the Independent.
But government sources also told the publication that there are concerns over the “disruptive impact” such a model could have on local banks and credit unions. At least three Irish delegations may visit Germany over the coming months to see the banking model in action, the Independent said.