Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy for his question and, in answering it, I will refer to the sector's involvement in social housing projects. Following a review of the investment framework for credit unions in 2017, the Central Bank introduced amending investment and liquidity regulations for credit unions. Since 1 March 2018, credit unions have been permitted to invest in regulated investment vehicles where the underlying investments are investments in tier 3 approved housing bodies, AHBs, for the provision of social housing.

The regulations require that investments by credit unions in tier 3 AHBs must be made through a regulated investment vehicle. The maximum permitted investment amount per credit union is 50% of a credit union's regulatory reserves where a credit union has total assets of at least €100 million and 25% of a credit union's regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in tier 3 AHBs of close to €700 million. It is a very substantial investment that can be facilitated.

As such, the Government and the Central Bank have fulfilled their role and it is now up to both the credit union and social housing sectors themselves to progress and develop any specific funding mechanisms. I understand three groups are seeking to establish special purpose vehicles, SPVs, to allow investment into tier 3 AHBs, including the two credit union representative bodies, the Irish League of Credit Unions and the Credit Union Development Association. It should be noted that the Department of Housing, Local Government and Heritage has primary responsibility for the formulation and implementation of policy and for the preparation of legislation relating to housing.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I thank the Deputy. I mentioned already that there is what is called headroom of up to €700 million that the credit union movement can invest in these housing projects. It is a question of them agreeing the structure of the special purpose vehicle if they choose to go down that route and getting clearance from the Central Bank of Ireland when there is a detailed proposal.

Today I met representatives of 30 credit unions in an organisation called Cultivate, which provides loans for the agri sector. They mentioned restrictions on borrowing but the Central Bank has made it crystal clear that no credit union in Ireland has gone to it recently seeking to extend the limits they are allowed. None of them has reached the individual lending limits to date. I encourage credit unions to put proposals to the Central Bank as quickly as they can. I hope the Central Bank can deal with those applications for special purpose vehicles and the associated regulatory matters in a very timely manner.

Seán Fleming (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I see three ways whereby credit unions can assist in providing funding for house building or for mortgages for people to purchases houses. One way is through the SPV we have discussed, which is a complicated exercise. The loan ultimately comes from the SPV in which the credit union has an investment, rather than coming through the credit union's own front door. I would be much happier to see credit unions being able to lend through their own front door, in their own name, rather than through an SPV. The most important thing that credit unions can do when they are beginning to work on it, and I gave the example of the agricultural sector, is to collaborate where they can to do a lot of their back-of-house work such as credit checking and financial modelling. If they come together on a collaborative basis without having to form an SPV, this would be another option. Finally, the major credit unions with substantial assets are in a position where a number of them are giving individual mortgages. I would like to see more of that as time develops.