Mr. Nick Ashmore:

We have had significant dialogue with the credit unions, although not in the last six months. One of the things which was very clear was that the credit unions do not lack liquidity because they have huge deposit bases - approximately €14 billion. It would cost more for them to borrow from us than to take the deposits from their customers. There was no solution to be offered in that context. When it comes to risk-sharing, we would love to be able to work with the credit unions in time. However, what we see with the credit unions, even with the reduced number of them, is that they are very fragmented and they have their own geography. That means that their operations are very lean and rely on volunteers. They do not necessarily have the resources individually to undertake SME lending, which is a fairly intensive process. Even the larger credit unions that represent the teachers or the gardaí are not naturally inclined to do SME lending because teachers and gardaí are not SMEs. It is more the regional credit unions that would do that.

What we are seeing, and what is encouraging, is that credit unions are starting to club together to share and pool their resources in order to create lending platforms which then help screen SME, agricultural or mortgage loans on behalf of a number of credit unions. The credit unions can then take their own decisions on whether to take the loans onto their own balance sheets based on the recommendation of that platform. We know they have been actively doing that in respect of mortgages. A group in Galway recently launched a scheme for farming loans across six credit unions. It is offering these loans at 6.75%, which is competitive with the banks. In time we hope that we will also see the emergence of SME platforms in that context. As those platforms become established, and as they establish a track record and an ability to underwrite credit loans effectively, we would love to be able to work with them in terms of risk-sharing, the credit guarantee scheme or other schemes. However, they need to achieve a level of substance first. It is very exciting to see the exercise in Galway. We are following it with interest.