Professor Patrick Honohan:

I re-emphasise that we regard the credit union sector as something that should grow and be a more important and stronger part of the financial sector, particularly in dealing with households, microbusinesses and so forth. We have been taking steps to help the process of strengthening the sector. We have been working with the Credit Union Restructuring Board, ReBo. We have had an attempt to save the Newbridge Credit Union in a new structure through merger. That did not work but we managed to achieve another merger. Weaker credit unions consolidation into stronger but still locally based credit unions is ongoing. That is not what the Deputy raised but I want to emphasise that we regard that as important.

I believe the credit union movement can become much stronger but I am not sure that the necessary strengthening of the credit union sector will be welcomed by some excessively narrow localism that leads credit unions to be too small to be effective. That is my own view, and I believe it is a view of some people within the sector but also some outside it. In most other countries the credit union sector consolidated somewhat 30 years ago. It is very small here.

There are some restrictions and there is a perception that they apply to more credit unions than is the case. I understand that fewer than 10% of credit unions are under restrictions for the total amount of lending they will do in a particular month. The vast majority of credit unions are not restricted in the amount of lending in aggregate they would make in a particular month. Some credit unions have individual loan size restrictions but the level at which the limit is imposed ensures that the vast majority of those credit unions can continue to make loans that are significantly more than the average loan for the sector, which is €6,000. That is the average loan size for the sector as a whole. The restrictions in place on a large number of credit unions tend to be for amounts between €10,000 and €30,000. Where a credit union has restrictions in the size of individual loans because of issues the Registrar has with them those loan sizes are sometimes €10,000, €30,000 and amounts in between. The Deputy mentioned €500 but in most cases the figure is much higher than that. Some cases are worse.