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

I want to assure the House that the case of Newbridge was an outlier, both in terms of its level of impairment and its actual size. It is an enormous credit union compared to the practice in many towns and villages. I also wish to restate the Government's commitment to the credit union movement, as I have done on several occasions on behalf of the Government over the last two and a half years. We have taken a number of actions to secure the credit union movement in Ireland, including establishing a credit union commission, and we have taken on board the key recommendations of that commission, including the establishment of the Credit Union Restructuring Board.

The Central Bank has the regulatory function over the credit union movement, and it has been working in partnership with several credit unions around the country to ensure that they are restored to strength, if they have any level of impairment, in accordance with the new regulatory regime. One of the key regulations applied by the Central Bank is that the level of reserves should be at 10% of the balance sheet of the credit union movement. There are 20 credit unions below that level. If they were not able to trade themselves into having adequate reserves and the Central Bank had to apply resolution fund money to bring them up to the 10% reserve figure, the cost of that is €11 million in total across the 20 credit unions. In comparison to what is going into Newbridge, the overall potential liability is quite small.

Beyond that again, there is another tranche of credit unions that are in constant friendly contact with the Central Bank, which is helping them to have better lending practices, better supervision mechanisms and to apply the rules more rigidly. However, the 20 credit unions are those in the high risk category, and that is the situation there. Once again I would like to reaffirm the Government's commitment to the credit union movement. We are fully aware of the part that credit unions play in many communities in Ireland, and how they are integrated with the community.

The Newbridge Credit Union building was not included in the transfer of assets to PTSB, which did not want it. A value of €15 million has been ascribed to the building on the credit union's balance sheet. My advice is that the market value of it is somewhere between €3 million and €4 million. No decision has been made yet about the building, but the likelihood is that the OPW will assist. While PTSB will maintain facilities in the existing building over the transitional period, PTSB does not intend to operate a branch of PTSB out of that building. The OPW will provide assistance and we understand that a particular State agency would have an interest in that building. There is no intention of leaving it empty. If it is occupied along the line I think may happen, the agency may provide very welcome community services out of that building.

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