Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I welcome the delegates and thank them for attending. Ms Motherway has made several interesting observations. On the issue of the funding imbalance, if I am correctly interpreting what she is saying, the risk is essentially one of an over-concentration of the deposit base among a relatively small percentage of savers. There are clearly risks inherent in this because if these savers move their money out, the funding base is undermined. Likewise, the loan-to-deposit ratio at an overall level within the credit union would be impacted upon. Are there controls or rules governing this situation as it stands?

Ms Motherway expressed the view that a small credit union with a low level of reserves might be in a better position than its larger counterpart with large capital reserves but an over-concentration of depositors. That is an interesting observation. However, the function of the reserves is to act as a buffer for absorbing losses and any bad debts that might emerge. There is an increasing trend in that regard. Surely, therefore, depleted reserves present a greater risk than an over-dependence on savings.