3 April 1997 Edition
Workers in struggle: Coalition's banking blackhole
The Dublin government is trying to keep a stranglehold on Credit Unions
The Credit Union network of 1.7 million members spread over 537 branches throughout Ireland could untangle the stranglehold the big banks have on the economy
Who controls money in the 26 Counties? The Dublin Government creates the monetary policy. The Central Bank prints money and regulates it, but real control of money lies with the retail banks, the AIBs, the Bank of Irelands, the building societies. They control money in all its facets. They control money through their branch network, through their ATM machines, through their loans to households, to firms, credit limits, investment schemes, pensions funds etc.
Banks can decide what type of business is acceptable, what is unacceptable, who should get loans and who shouldn't. All of this happens with minimal regulation and interference from government.
But this is only one side of the equation. The building blocks that make up the banking sector's power base are in fact the ordinary people whose deposits, overdrafts loans and pension contributions etc culminatively make up the wealth of the banking community. The top four banks have between them combined assets of £59.203 billion. These assets have been created by the Irish people who have no control over their use and are often victims of the acculmulated power of £59 billion rather than its beneficiaries.
Now in the 1990s the the big corporations in the banking community have serious competition. A second network of branches and customers has emerged with the capacity to threaten the retail bank network. The Credit Union network of 1.7 million members spread over 537 branches throughout Ireland could untangle the stranglehold the big banks have on the economy. Their biggest obstacle is the Dublin Government.
The credit union network is a diverse sector with branches whose assets total over £2.5 billion. Most branches cover agreed geographical areas but also includes those who share a workplace.
This network has evolved by offering credit to those ignored by the banking sector on a simple premise that if you are a regular saver you can also be a regular borrower. The average loan is £2,800 paid over 18 months, a sum overlooked by many banks as uneconomic to service.
The credit union movement's growth has put it in a position now to offer much more subtantial loans and a wider range of services. Some branches have introduced ATM machines and provide foreign exchange services.
Democratic Left Minister Pat Rabbitte is responsible for the new Credit Union Bill which despite being substantailly amended since it was first published is still being opposed by the Irish League of Credit Unions. Their General Secretary Tony Smyth believes that the bill ``in its current form would prevent them from meeting the needs of local communities''.
The key issue is Rabbitte's determination to put a cap of £30,000 as the maximum amount a credit union can lend. Smyth says his members want to be able to get loans to build house extensions or get a new kitchen and a car in the same year.
Up until now members can usually take loans out to the value of three times their savings. The credit unions are looking for the flexibility that the retail banking sector has in giving loans.
Pat Rabbitte though has asserted that Credit Unions should not become de facto banks or building socieities. There is no recognition from his side that the Credit Unions have a right to compete with the banks on an equal footing. It seems that for the Dublin Government the dictats of the free market do not apply in the banking sector.
Throughout the deliberations on the bill the Credit Union Movement has been presented as an obstacle to progress. There is no recognition from the Dublin Government that the Credit Unions' success is due partly to their professionalism in providing services as good as a bank and in their dedication providing services to a customer base ignored by the retail banks.
There is no recognition either of the role credit unions can play in local economic development providing loans for small business and community-led enterprise, another area ignored by the retail banks.
This is all part of a black hole in the Dublin's Government's promised legislative programme on banking in the 26 Counties. In 1993 and again in 1994 we were promisd a state bank or a state sponsored third force bank to compete with the retail banks and the building societies.
All the elements are there for a dynamic multifaceted banking corporation. The elements are ICC Bank for commercial and industrial loans, ACC bank for agricultural development, An Post for savings and bonds, TSB for retail banking and the Credit Union network for community-led services.
The only action taken by succesive governments in the 1990s is an ongoing determination not to let the third banking force emerge. The stunting of credit union development is part of this process.
It just goes to show that money does talk but let it raise its voice in favour of the people who create it and it must be silenced.
What sort of worker are you? Here in An Phoblacht we thought we had identified all the different categories. The unpaid, unemployed, part-time, full time, over paid and most frequently found - the low paid (perhaps better known by its common name the wage slave). Then you have the managers, the executives and that most pampered group, the executive directors. Now we uncovered a new category: the Performance Related Pay worker.
AIB, who published their 1996 annual report last week, have a lot of these performance related people on the books, all of them in management positions.
Four that jumped out are the banks executive directors. The chief executive of AIB's US subsidiary Jerry Casey took home £1.32 million in 1996, leaving the other three to share £1.29 million between them, an average of £430,000 each.
This was made up of salaries and a performance-related bonus which can be up to 50% of your gross salary. The four AIB directors got a bonus that was worth 48% of their gross salary.
We asked AIB about the bonus. Why was it not available to all AIB workers? Their answer was startlingly simple. Some workers are paid increases as part of the PCW or new partnership 2000 agreement. They get increases no matter what their performance and they all get profit shares.
However the PCW increases between 1995 and 1996 totalled 3.5%. The salaries of executive directors increased by 22% (£80,000), not counting their performance bonuses.
For the record the three executive directors also shared professional fees of £59,000, pension contributions of £156,000, profit sharing payments of £23,000 and £86,000 in taxable benefits. It just shows that PRP is better than PCW any day.
The Credit Union network of 1.7 million members spread over 537 branches throughout Ireland could untangle the stranglehold the big banks have on the economy
Who controls money in the 26 Counties? The Dublin Government creates the monetary policy. The Central Bank prints money and regulates it, but real control of money lies with the retail banks, the AIBs, the Bank of Irelands, the building societies. They control money in all its facets. They control money through their branch network, through their ATM machines, through their loans to households, to firms, credit limits, investment schemes, pensions funds etc.
Banks can decide what type of business is acceptable, what is unacceptable, who should get loans and who shouldn't. All of this happens with minimal regulation and interference from government.
But this is only one side of the equation. The building blocks that make up the banking sector's power base are in fact the ordinary people whose deposits, overdrafts loans and pension contributions etc culminatively make up the wealth of the banking community. The top four banks have between them combined assets of £59.203 billion. These assets have been created by the Irish people who have no control over their use and are often victims of the acculmulated power of £59 billion rather than its beneficiaries.
Now in the 1990s the the big corporations in the banking community have serious competition. A second network of branches and customers has emerged with the capacity to threaten the retail bank network. The Credit Union network of 1.7 million members spread over 537 branches throughout Ireland could untangle the stranglehold the big banks have on the economy. Their biggest obstacle is the Dublin Government.
The credit union network is a diverse sector with branches whose assets total over £2.5 billion. Most branches cover agreed geographical areas but also includes those who share a workplace.
This network has evolved by offering credit to those ignored by the banking sector on a simple premise that if you are a regular saver you can also be a regular borrower. The average loan is £2,800 paid over 18 months, a sum overlooked by many banks as uneconomic to service.
The credit union movement's growth has put it in a position now to offer much more subtantial loans and a wider range of services. Some branches have introduced ATM machines and provide foreign exchange services.
Democratic Left Minister Pat Rabbitte is responsible for the new Credit Union Bill which despite being substantailly amended since it was first published is still being opposed by the Irish League of Credit Unions. Their General Secretary Tony Smyth believes that the bill ``in its current form would prevent them from meeting the needs of local communities''.
The key issue is Rabbitte's determination to put a cap of £30,000 as the maximum amount a credit union can lend. Smyth says his members want to be able to get loans to build house extensions or get a new kitchen and a car in the same year.
Up until now members can usually take loans out to the value of three times their savings. The credit unions are looking for the flexibility that the retail banking sector has in giving loans.
Pat Rabbitte though has asserted that Credit Unions should not become de facto banks or building socieities. There is no recognition from his side that the Credit Unions have a right to compete with the banks on an equal footing. It seems that for the Dublin Government the dictats of the free market do not apply in the banking sector.
Throughout the deliberations on the bill the Credit Union Movement has been presented as an obstacle to progress. There is no recognition from the Dublin Government that the Credit Unions' success is due partly to their professionalism in providing services as good as a bank and in their dedication providing services to a customer base ignored by the retail banks.
There is no recognition either of the role credit unions can play in local economic development providing loans for small business and community-led enterprise, another area ignored by the retail banks.
This is all part of a black hole in the Dublin's Government's promised legislative programme on banking in the 26 Counties. In 1993 and again in 1994 we were promisd a state bank or a state sponsored third force bank to compete with the retail banks and the building societies.
All the elements are there for a dynamic multifaceted banking corporation. The elements are ICC Bank for commercial and industrial loans, ACC bank for agricultural development, An Post for savings and bonds, TSB for retail banking and the Credit Union network for community-led services.
The only action taken by succesive governments in the 1990s is an ongoing determination not to let the third banking force emerge. The stunting of credit union development is part of this process.
It just goes to show that money does talk but let it raise its voice in favour of the people who create it and it must be silenced.
Banking on a bonus
What sort of worker are you? Here in An Phoblacht we thought we had identified all the different categories. The unpaid, unemployed, part-time, full time, over paid and most frequently found - the low paid (perhaps better known by its common name the wage slave). Then you have the managers, the executives and that most pampered group, the executive directors. Now we uncovered a new category: the Performance Related Pay worker.
AIB, who published their 1996 annual report last week, have a lot of these performance related people on the books, all of them in management positions.
Four that jumped out are the banks executive directors. The chief executive of AIB's US subsidiary Jerry Casey took home £1.32 million in 1996, leaving the other three to share £1.29 million between them, an average of £430,000 each.
This was made up of salaries and a performance-related bonus which can be up to 50% of your gross salary. The four AIB directors got a bonus that was worth 48% of their gross salary.
We asked AIB about the bonus. Why was it not available to all AIB workers? Their answer was startlingly simple. Some workers are paid increases as part of the PCW or new partnership 2000 agreement. They get increases no matter what their performance and they all get profit shares.
However the PCW increases between 1995 and 1996 totalled 3.5%. The salaries of executive directors increased by 22% (£80,000), not counting their performance bonuses.
For the record the three executive directors also shared professional fees of £59,000, pension contributions of £156,000, profit sharing payments of £23,000 and £86,000 in taxable benefits. It just shows that PRP is better than PCW any day.