Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I have been informed there are a number of deposit accounts not entitled to full compensation under the deposit guarantee scheme, DGS, or the eligible liabilities guarantee, ELG, scheme or both due to the nature of the products or deposit options in which those account holders invested. These include investments by credit unions and other fixed deposit holders. The proceeds from the disposal of IBRC’s assets will be used to repay creditors in accordance with normal Companies Acts priorities and consequently, preferred creditors will be paid first and then the debt which NAMA will have purchased from the Central Bank will be paid. If there are proceeds available after repayment in full of the NAMA debt, these proceeds will be applied to remaining unsecured creditors. This would include credit unions to the extent that their deposits are unguaranteed.

I am advised by the Central Bank of Ireland that certain tracker bonds sold to credit unions, which were liabilities of IBRC at the time of the liquidation, have a structured deposit element which is covered by the DGS for that element of the product. As a result, the first €100,000 of any claim from these depositors is covered under the DGS. The bond itself is not covered by the ELG scheme as it predates that scheme. Credit unions affected have been advised to deal with the special liquidator regarding this matter. Any issues regarding losses incurred by other fixed deposit holders are also a matter for the special liquidator.

In respect of credit unions, the Government already has provided €500 million of taxpayers’ money to support the stability of credit unions through resolution and restructuring. In addition, the credit union movement has its own stabilisation fund.

See this speech in context