Right I am getting more and more frustrated with the banking situation here in Ireland. We don’t have a functioning banking system. We have no credit being extended to the small businesses, households or young people trying to get on the housing ladder. The era of the eighties rides again from what I can see. Even though in my opinion we are back on a sustainable road to recovery excluding our huge burden of debt of course, in the eyes of the general population we are not and there is no confidence around. There is still uncertainty out there and I believe this is partly caused by our broken banking system. Fix the banking system and things will get better very quickly. There is no confidence among the general population in our banking system for good reason.
We have the highest savings rates that we have seen for years. This money is being deposited with the banks and is not being lent out. It is being horded in order to prop up badly damaged balances sheets. Unfortunately there are not a lot of alternatives for your savings at the moment and with the government guarantee being in place this mitigates any risk on behalf of the depositor.
We are getting back to a more traditional bank model whereby all lending is funded by deposits not by inter bank borrowings. This is all good if the banks would actually lend out a large percentage of the deposits they have but as we all know this is not happening.
Well I have an alternative idea. On one hand we have a viable economy driven by exports. We have a huge amount of people employed in multi national companies and in an up and coming IT industry. Things are not all that bad. Out tourism industry is improving. As a regular commuter around Europe I am noticing more and more tourists on the flights into Dublin on Friday evenings. This is all positive. There was a stage that I would have been on flights into Dublin that were only 25% full on a Friday evening. This is slowly beginning to change at long last. The stags and hens are slowly coming back. All good news!
What is every young Irish person’s ambition? To build a career, set up a home in Ireland and maybe have a family and provide security for the future along with having a good time along the way. How do we achieve this for the younger generation? Well on the job creation front the government is doing all they can and they are beginning to reap the rewards. Over the past few weeks there were various announcements on the creation of new jobs. Hopefully this momentum will continue.
To improve things in the country I believe we need a back to basics, trust worthy financial institution that lends out a very large percentage of its deposit base to its clients for the purpose of purchasing a home. Now some might say I am just back promoting property again and this is mad. Well no. I believe that property prices for what I call homes, have hit a realistic level and if they are not at the bottom they are certainly close to the bottom.
There are genuinely hard working people in this country that have secure incomes and jobs with long term prospects that want to purchase their own home. We can all talk about the advantages of renting and it is easy for somebody coming to the end of their successful career talking about selling up banking the money and renting. All brilliant and prudent stuff. This is something my father did many years ago when he was getting 15% on his cash and paying a yield of 5% to 6% for renting a property, yes it made sense but it did not stop me buying my first home around that time. To own your first home is a very nice feeling. It gives one a sense of high self esteem and security. This is what young people in our country want but due to a broken banking system cannot have.
What I want to see is the launch of a brand new Building Society in Ireland. One that stands for old prudent principals and values. If it was not for the Building Society movement back in the seventies and eighties people could not have purchased their own homes. A home is not an investment it is a place to live in, it is a utility, it provides a sense of security and shelter for your family. It establishes one as a part of a community. These are the old values that I would like to see Ireland get back to. In the UK there are still 49 building societies going strong providing finance for people to buy their own homes. Our banks will be out of the mortgage market altogether soon. We need an alternative source of finance to help young people purchase their own homes.
I am sure the average Irish citizen would much prefer to deposit their funds in a Building Society and see it being lent out in mortgages than deposit it in the big pillar banks who just hoard it assuming that the protection and products are comparable.
I really believe it is time for a new Building Society in Ireland. I have 18 years experience of working in a Building Society and have an in dept understanding of how they operate. I can supply the technology and operation experience. I could install the very best of technology for a fraction of the cost that other institutions pay. Under the current legislation I need 10 names to promote the idea to the Central Bank. After incorporation I need a small team of volunteers behind me to get the thing up and running. We can beg borrow and steal resources to pull this off and get publicity. I was involved in the set up of a brand new retail bank in Ireland, Postbank and I learnt a lot of what to do and how to do it. I also saw a few mistakes being made so they would not be repeated. I don’t even need a branch network. I could use each of the computerised Post Offices to provide transaction services to our clients. The technology to do this already exists and An Post offers this service.
So if there is anybody out there who is interested in getting involved please get in touch.
0 comments:
Post a Comment