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

The credit union movement is a very important sector and I would like to give the Deputy the update he seeks. There were 388 credit unions at the end of December 2013 with total assets of €13.9 billion. Total members' savings for 2013 amounted to €11.6 billion. Loans to members have decreased by almost 13 per cent from December 2012 and currently stand at €4.3 billion, with the sector average loan-to-asset ratio at 32%. Approximately €778 million in total provisions for bad debts were reported for 2013, compared with arrears in the sector of approximately €756 million. These figures show that just over 100% of arrears are currently being provided for. A total of 18 credit unions had a reserve ratio less than the required 10%, with a combined deficit of €11 million.

The Commission on Credit Unions recommended a range of measures to support the credit union sector.  A key recommendation was that the sector be restructured on a voluntary, incentivised and time-bound basis. The Government contributed €250 million to the credit union fund to support this process, which is being overseen and facilitated by the Credit Union Restructuring Board, ReBo. ReBo has assisted in two credit union mergers recently - the merger of Balbriggan, Skerries and Donabate credit unions to become the Progressive Credit Union, and the merger of Baltinglass and Castledermot credit unions. ReBo has engaged with more than 300 of the 388 credit unions to identify their willingness to participate in the restructuring process. Currently, ReBo is assisting 96 credit unions in 47 projects. ReBo is working to the timetable set out in the commission's report and is expected to complete its work by the end of 2015.   

The commission also recommended that a statutory stabilisation fund be established to support credit unions that are under-capitalised but are otherwise viable. The statutory basis for stabilisation is in place and the Department of Finance has published a consultation paper on the introduction of the stabilisation levy of €5 million per year towards a total funding need of €30 million.  At the request of credit union representatives, this consultation process has been extended until the end of May.

Additional information not given on the floor of the House

The Credit Union and Co-operation with Overseas Regulators Act 2012 implements more than 60 of the Commission on Credit Unions' recommendations, including those related to governance and regulatory reform.  The Central Bank is currently consulting the sector on the introduction of a tiered regulatory approach under the Act.

In terms of regulatory interventions, the Central Bank has advised me that about 58% of all credit unions are subject to lending restrictions. Of the credit unions with lending restrictions, more than 69% can lend €20,000 or more to an individual member. 

I am satisfied that these measures, together with governance and regulatory changes introduced on foot of the commission report, will underpin a stable credit union sector into the future.

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