Unmasking the huge Elephants in An Post’s Room:-
ThePlatform.ie – Ireland’s Solutions Resource.
by Seamus F. Maye, 13th Sept 2020.
Today’s Sunday Indo provides very positive coverage of recent and ongoing developments at An Post. It would appear that Debbie Byrne (MD of An Post Retail) is one able dealer, bringing much needed positives to our severely ailing prize asset.
An Post is developing a platform that will apparently rival Revolut, N26 and others. It will facilitate Apple Pay, Google Pay and Fitbit Pay. An Post already offers Credit Cards and Loans and plans to soon offer Mortgages and SME Loans too.
Ms. Byrne says that An Post wants to position itself as “a new force in financial services”. So far so good.
She then states that: “There are 500 Post Offices which don’t have a bank within 5kms. We want to be the Community Bank (I give her a yellow card here), though she somewhat atones for this misleading assertion by actually then identifying the first elephant in the room: “We can’t call ourselves a bank [because An Post doesn’t have a banking license], but we offer community banking services. The banks are leaving communities”.
This is really the nub of it. Why has An Post not got a banking license? Remember, it was a condition of the Troika bailout that Ireland brings competition into the Banking market. This has not happened. In fact successive governments have been hell bent on preventing competition in the Irish banking market.
We must also consider Article 45.2.4 our our Constitution which states, as follows:- “That in what pertains to the control of credit the constant and predominant aim shall be the welfare of the people as a whole” – what has happened to this?
Against this background, successive governments have forced the closure of hundreds of Post Offices, with more closures to come (whilst also rendering the Credit Union movement unsustainable, but that’s a story for another day).
The fact is that An Post is becoming an “Agency Bank”, it is evolving into a cheaper option for pillar banks to sell their product through, as they continue to close their own branches. An Post will earn a commission / admin fee, call it what you like but it is not Competition in the real sense, not what the Troika demanded, nor does it satisfy Article 45.
An Post is peddling Avant Credit Cards, it could be AIB or BOI Car Loans next and it might be Bank of Santander Mortgages before long. However, in all these cases, huge profits are/ will be harvested from Irish consumers, SME’s and farmers by large corporate profit maximizing banks, that are being gifted the use of our near crippled Post Office network- keep an eye out for Grant Thornton’s upcoming report on the PO Network – I believe it is going to make for grim reading. Hundreds more Post Offices face closure and An Post is seeking more government funding, possibly in the order of €70m, to subsidize its flawed business model.
Now let’s look at the real problem, the bigger picture for Ireland’s socio-economy – the artificially high interest rates being imposed / facilitated by Government on Irish consumers, farmers and SME’s.
Currently in Germany Mortgages start at .25% (yes point 25 per cent), Consumer Loans start at 1.49% and Car Loans at 1.64% and we are all supposed to be in the “single market”. Clearly, Irish consumers of credit are being taken for an intolerable ride.
I know people paying up to 15% interest on Bank overdrafts in Ireland, because they couldn’t get business loans.
An Post is boasting that it offers loans of more than €20k at 5.9% and will offer “green” loans of over €20k at 4.9%. I wonder what smaller loans will cost?
An Post is sitting on billions in deposits which is earning the State negative interest rates. With a banking license, An Post could itself actually create credit and sell this credit to Irish citizens at rates similar to those pertaining in Germany or at the very least, a damn sight lower than the current penal rates.
Why are successive governments so beholding to pillar banks and to the ECB’s policy of eliminating competition in the banking sector? Why are Irish citizens forced to pay the highest rates in Europe? Why are we allowing one our most treasured assets be highjacked by giant corporations, whose political and economic power is such that they are frequently not answerable to the very laws of our land!
Irish citizens together with both the rural and indigenous economy need competitive real community banking. There are several viable avenues to achieve this. Turning the Post Office Network into a people’s bank is one of the standout options.
And so to An Post Retail CEO, Debbie Byrne, whose hands are tied, I have this to say – you are a very smart and successful marketeer with great ideas and fair play to you but please don’t call an agency network for corporate banking a Community Bank when it is patently anything but. It’s a sell-out.
Seamus F. Maye
International Small Business Alliance (ISBA) & Joint Chairman of the Public Banking Forum of Ireland (PBFI).