Can we set up a new co-op bank?

The other day, sonofstan suggested

One very useful, sane and practical thing ICTU could do, and they’re probably the only organisation in Irish society with the resources to do it, is set up a co-op bank.

I would be interested in trying to pursue that suggestion, and in response to sonofstan’s comment said I would try to turn it into a motion for my union branch AGM in the next few weeks. I turn to you, CLR readers, for help with this.

The first question is feasibility: assuming it had the desire to, could Congress set up a co-op bank? The website howbankingworks.ie sets out some requirements for a bank in Ireland:

To obtain a banking licence, the applicant must:-

Have a significant paid-up share capital. The documents available from IFSRA indicate a requirement for IR£5m paid up share capital – this amount has remained unchanged for more than 20 years. IFSRA has powers to amend this amount, and reflecting the change in the value of money in the intervening period, this author is of the opinion that the amount required now would exceed €10m.

Have a demonstrable capacity to access or subscribe such further capital as may be required from time to time

Ensure that there is no dominant shareholder among the group. Any shareholder holding more than 5% would be subject to exceptional requirements. The dominance rule refers to immediate connections of the shareholder. In practice, the holdings of a husband, wife, and children are considered together for calculation of dominance. In practice, the dominance rule suggests that a minimum of 20 shareholders are required, while conforming with the dominance requirement.

Also, it must ensure that the bank’s deposits are not dominated by a single shareholder, or by the top 10 depositors (who together may not exceed 50% of the banks deposits)

Have objectives and a plan which conform to sound banking principles

Establish a legal entity and corporate structure which is suitable for the business of banking, with appropriate board-level controls, internal controls, including risk controls and audit controls, and reporting systems

Board members must be undoubted, and have suitable experience and skills, and IFSRA reserves the right to approve (or reject) individual members.

Ensure appropriate insurance or other guarantees for the fidelity of its staff.

Conform at all times to a range of financial ratios including specified capital adequacy requirements, liquidity ratios, etc.

Put in place suitable systems for control of lending exposure, including exposure to businesses in which a shareholder has an interest

Conform to a wide range of legislation including money-laundering legislation

Participate in the deposit protection scheme

The above list is far from complete, but indicates the nature of the most significant requirements.

It is clear from this that Congress could not own a bank by itself, but that would not be the purpose of a co-op bank anyway. Getting people with the relevant skills would probably take a bit of work with a new bank, but I would be surprised if it were impossible. It might be difficult for Congress to do that, though.

I think the most sensible approach for the coming union conference season would be trying to get Congress and individual unions to do preparatory work rather than jumping straight in with a set of motions instruction them to set up a new co-op bank.

I can identify things that need to be thought about in preparing motions on preparatory work. First, what should that work consist of? If the Congress leadership isn’t highly enthused about this, how would a motion be framed in such a way as to limit (or even prevent) them from swatting it away with a token “feasibility study” and burying it? [Obviously, if somebody senior was determined to kill the idea, it would be difficult to stop them. For example, suppose a decision is made to commission a team of banking, legal, and other experts to prepare an analysis for the next Congress biennial delegate conference. A key official in Congress could steer the research by asking the experts to assess the level of interest in the idea, or to give greater detail in the report on the barriers and risks.]

Second, what is the best way of getting Congress’s attention and involvement? Is it a request from one or two unions at the Congress executive for the establishment of a working group to explore the idea or is it a motion on the floor of the biennial delegate conference?

And third: am I missing anything essential?

Your thoughts on this, fellow CLRers?