Monday 20 November 2017

Another 12 credit unions face takeover

AT LEAST half a dozen more credit unions face being taken over by the Central Bank as loan arrears surge past €1bn.

Up to 100 of the country's 408 credit unions could eventually be merged with stronger ones, with at least 10 currently considering merging ahead of moves by regulators to force a restructuring, it emerged today.

Large numbers of borrowers are unable to repay their loans, putting huge pressure on credit unions, sources said.

On Friday, the High Court ordered the replacement of the management and board of Newbridge Credit Union in Co Kildare, one of the largest credit unions in the State

Luke Charleton of Ernst & Young was appointed as a special manager, following an application from the Central Bank, to oversee the day-to-day running of the credit union.

Newbridge is the third largest credit union in the State, with assets of €190m. It marked the first time the Central Bank regulators used new laws to take control of a credit union.


A Government commission reported in October that there are 26 unions where there are serious concerns about the amount of money they have set aside to cover loan losses.

The Credit Union Commission also found loan arrears at the country's 408 credit unions have risen to €1bn, almost triple the level of arrears in 2006.

Finance Minister Michael Noonan has set aside €250m this year and the same again for next year for credit unions.

Credit union sources expect that up to 100 credit unions could eventually be merged with stronger ones.

A senior figure from the sector said: "Newbridge won't be the only one where the Central Bank takes control. There will be six or seven where a special manager is appointed."

The co-operatives are having to write off large amounts as consumers are unable to make repayments and many have also been affected by a collapse in commercial property.

Almost 300 credit unions have been told by regulators to restrict their lending, which has seen the overall amount lent out by the Irish League of Credit Unions in the Republic drop by €670m in the year to last September to €5.03bn.


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