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

I thank the three Deputies from Kildare for raising this issue. I am particularly grateful to Deputy Martin Heydon for keeping me informed throughout the holiday period of the strength of feeling locally. Several Deputies, including the three who spoke today, have in recent months raised issues of concern to the members of Newbridge credit union. My objective is to ensure members' savings are protected, notwithstanding the extent of the very real problems that exist at the union.

This will be the first instance in which the taxpayer is being called upon to advance sizeable sums of money to support a credit union in difficulty. While the figure cannot be disclosed at this time, it is substantial and runs into tens of millions of euro. This funding is required to cover the losses at Newbridge, ensure members' savings are protected and place the credit union on a stable financial footing. The money will come from a resolution fund to which the Government has contributed €250 million of taxpayers' money, recoupable over time from credit institutions via a levy. Combining Newbridge and Naas credit unions will ensure that services continue to be available in Newbridge. There is no question of members of the latter facility having to travel to Naas to access services. Furthermore, Newbridge members will hold full membership rights in the combined credit union.

There has been a suggestion that Newbridge had a clean bill of health until the appointment of the special manager. In fact, that appointment was made because of Central Bank concerns in regard to the high level of loan losses incurred by the credit union, which impacted on the level of its reserves. There were also concerns about some of the lending made, which went beyond the traditional type of lending normally provided by credit unions. Without the appointment of the special manager, the position of Newbridge credit union would have continued to weaken and deteriorate, which could have had serious consequences in terms of undermining its future viability.

Members raised the prospect of a stand-alone resolution for Newbridge. Under the resolution process it is not possible to recapitalise a credit union on a stand-alone basis. I have been advised by the Central Bank that of the options available under the Central Bank and Credit Institutions (Resolution) Act 2011, a combination with Naas represents the best way of delivering a sustainable credit union presence in Newbridge into the future. The extent of the problems at Newbridge means it is not sustainable for it to continue as a stand-alone entity. As a resolution case with financial difficulties and viability concerns, nor does it meet the statutory conditions for stabilisation support.

The Central Bank undertook a process under the Act involving the examination of possible combinations with other credit unions. As part of this process, Naas credit union submitted a proposal to the bank, setting out the basis upon which it would be prepared to combine with Newbridge. At the request of the Governor of the Central Bank, I have confirmed that I am prepared, in principle, to support the proposal. However, it remains subject, among other requirements, to due diligence, completion of relevant documentation, Naas credit union board approval, regulatory consideration and High Court approval. I expect these steps to be completed expeditiously and that the Naas-Newbridge combination will be finalised by the end of this year. To reiterate, the successful combination of the credit unions is considered the best way to ensure the continuity of services for members in Newbridge.

The issue of dividend payments to Naas members for the current year is a matter for the board of Naas credit union and, following the combination, will be a matter for the board of the merged entity in future years.

The strict confidentiality provisions of the legislation are necessary to allow space for negotiations to be undertaken and concluded. In this case, however, it has also resulted in an information deficit at local level. The Central Bank and the special manager have been working to address this in recent weeks and a number of communications have issued, with further details to be made available. The special manager has also provided members with a dedicated e-mail contact address for queries. It is important that the remaining steps of the process conclude as expeditiously as possible and I have asked my Department to work with the Central Bank to achieve this. While the need for a significant taxpayer injection in this case is deeply regrettable, it is necessary to ensure the protection of members' savings and the continued availability of credit union services in Newbridge.

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