Simon Harris (Wicklow, Fine Gael) | Oireachtas source

I thank the Deputy for raising this matter and giving me an opportunity to provide information to him and his constituents. The Central Bank received approval from the High Court under the Central Bank and Credit Institutions (Resolution) Act 2011 to transfer the assets and liabilities of Newbridge Credit Union, excluding the premises, to Permanent TSB. This action was necessary to safeguard members' savings as the only alternative available to the Central Bank was liquidation, which would have meant the loss of unprotected savings of €11 million. These included the savings of charities, schools and individuals.

On foot of a request from the Governor of the Central Bank, the Minister for Finance agreed to pay Permanent TSB a financial incentive of up to €53.9 million to support the transfer. This consisted of €23 million in cash up-front, €4.25 million for restructuring and integration costs, €2 million for other transferring liabilities and a maximum of €24.7 million to cover additional costs resulting from all loans being written off with nothing recovered. A 50:50 risk sharing agreement is in place whereby the resolution fund will absorb 50% of losses on loans performing below their transfer value and share 50% of gains on loans performing above their transfer value. The financial incentive provided in the Newbridge case is fully recoupable from the financial services sector over time in the form of a levy.

The strategic approach taken by Permanent TSB to the former Newbridge Credit Union, including the provision of any insurance coverage for customers, is a commercial matter for that entity. The Minister for Finance was informed by the Central Bank that Permanent TSB wrote to the former members of Newbridge Credit Union in December 2014 to state its intention to fully integrate the business of the credit union into the local branch of Permanent TSB. This correspondence included details of Permanent TSB's approach to life insurance on deposits and loan protection insurance, which was a commercial decision taken by Permanent TSB. All questions regarding those assets and liabilities, as well as queries on ongoing customer products and services, can and should be addressed to Permanent TSB in the first instance.

The Minister for Finance emphasises the Government's recognition of the important role of credit unions as a volunteer co-operative movement and the distinction between credit unions and other types of financial institutions. The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall. In February 2015 the Central Bank approved the extension of the common bond of Naas Credit Union to incorporate a number of other areas including Newbridge. This will ensure that credit union services are again available to people in the Newbridge area. The Government is determined to support a strengthened and growing credit union movement and we encourage the movement to work with stronger credit unions so they can provide a viable option for assisting weaker credit unions. Each and every action taken by this Government on the recommendation of the Central Bank was aimed at protecting members' savings, including charities, schools and local savers in the Newbridge area.

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