Oireachtas Joint and Select Committees

Thursday, 3 December 2015

Public Accounts Committee

2014 Annual Report and Appropriation Accounts of the Comptroller and Auditor General
Vote 7 - Office of the Minister for Finance
Chapter 1 - Exchequer Financial Outturn for 2014
Chapter 2 - Government Debt
Chapter 3 - Cost of Bank Stabilisation Measures as at the end of 2014
Finance Accounts 2014

10:00 am

Photo of Paul ConnaughtonPaul Connaughton (Galway East, Fine Gael) | Oireachtas source

Was it the belief in the Department of Finance that the hole that existed was of the order of €250 million? How was the figure arrived at and how come there is such a difference between it and what has been drawn down?

There were two funds, the fund for the resolution, which was €250 million, and a second fund of €250 million for the Credit Union Restructuring Board, ReBo. There were estimates, which I considered to be over-estimates, made of the likely losses within the credit union sector a number of years ago. At the time, because we were still in the programme, our programme partners were anxious that enough money would be put aside to ensure that even if the worst case scenario materialised in the credit union sector there would be enough money available. The eventual agreement was that we would have two €250 million funds. In the event, a number of things happened. First, I do not think the problems, although they were significant, and very significant in some individual credit unions, throughout the movement were quite as bad as had been estimated. Second, there is the capacity of the movement to look after itself, both through its own savings protection scheme, SPS, and by not paying out dividends as much as they had been through retention of profits, and being able to repair the balance sheets. I believe they were underestimated.

Also, regarding ReBo, the state aid rules are such that it is very difficult. If credit unions take aid, they have to pay it back, and many of them feel it is easier, if they are amalgamating, to keep that to a minimum and so they can, within their own resources, see the benefits of amalgamation. ReBo has done a very good job in providing the credit union movement with the capacity and incentive but not necessarily, and it has not turned out to be as necessary, to provide money to allow credit unions to amalgamate.

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