The necessary contraction in the size of the balance sheets of the main Irish clearing banks has left a gap in the lending market which has a particular effect on Irish SMEs. We support the introduction of a new local public banking model in Ireland along the lines of the Sparkasse public savings banking system which has successfully operated for the last 200 years in Germany.
Ten new regional banks could be established in the next five years operating with a central management and information system. The ownership of these banks could rest with a combination of local authorities and state support agencies. The bank branches would operate on a fully professional basis specialising in loan sizes to small business above those given by credit unions and below the standard loans issued by commercial and investment banks.