Investing in our Future
Strategic Investment Bank - Financing Ireland's Investment Economy
Issued : Thursday 25 March, 2010
Labour's Strategic Investment Bank is designed to get credit flowing again in the Irish economy, and to be the engine of Ireland's re-invention as an export-led, sustainable investment economy.
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Summary
A property-led investment culture belongs the policies and the politics of the past. Labour's economic strategy is centred on growing existing Irish businesses that create high quality and sustainable employment, and nurturing the innovations and business ideas that will prosper in the future.
To achieve that goal, we need investment finance. Even with NAMA, it is clear that Irish banks will not be in a position to support investment in innovative businesses and in key infrastructure.
What we need now is a new 'greenfield' bank with a clear mission to support investment in SMEs and innovative firms, and to assist in the funding of infrastructural investment.
How it will work:
- The Strategic Investment Bank would be set up as an independent commercial operation, using €2billion from the National Pension Reserve Fund as initial capital. The capital ratio of the bank would be set by the Financial Regulator. It would operate on a strict arms-length basis from Government.
- Irish citizens and the Irish diaspora would be encouraged to make deposits in the bank, and to purchase Strategic Investment Bank Citizens' Bonds, which would be a way to invest in the recovery of the Irish economy, and would be of different maturities. The Strategic Investment Bank would attract funding from a number of sources, including consumer deposits and wholesale markets (once market conditions normalise). It could also use some initial funding from the NPRF.
- Irish companies need growth capital. The Strategic Investment Bank would be a key lender to SMEs and innovative firms. The Enterprise Agencies would develop relationships with the Strategic Investment Bank to facilitate introductions of high potential firms. Investment decisions, however, would remain the exclusive preserve of the Strategic Investment Bank. The Strategic Investment Bank would also support investment in large infrastructure projects.
