Tuesday, 9 November 2021
Ceisteanna Eile - Other Questions
74. To ask the Minister for Finance how he is supporting the credit union sector to continue to provide essential financial services to local communities; and if he will make a statement on the matter. [54363/21]
The programme for Government includes a number of commitments to the credit union sector. I intend to shortly issue proposals emanating from the review of the policy framework for consultation. This will involve meeting with representative bodies and other stakeholders, a commitment I made in my recent engagements. In total, I have had 23 meetings with credit union stakeholders this year, including with representative bodies, collaborative ventures, service providers, the credit union advisory committee and the Registry of Credit Unions, to gather further information to help inform the next steps of the review.
In supporting the sector to provide essential financial services to local communities, I will outline some of the recent developments which highlight the potential of the sector to fulfil a role in community banking. The Central Bank of Ireland in recent years reviewed both the lending and investment frameworks. Since January 2020, credit unions now have a combined capacity to provide up to €1.1 billion in additional SME and mortgage loans with further capacity available to credit unions that can comply with certain conditions, or on the approval of the Central Bank of Ireland. As of June of this year, credit unions had a combined mortgage and SME loan book of €372 million, an increase of 18% on last year. There is, therefore, adequate headroom for credit unions to issue more mortgages and more loans to the SME sector, without requiring any further Central Bank of Ireland approval at the moment. Credit unions are permitted to place their surplus funds that have not been lent to members in range of investments, including tier 3 approved housing bodies, AHBs. I am pleased to share with the Deputy that two credit union-backed funds have received approval from the Central Bank of Ireland. Credit unions will be able to invest up to €900 million in these regulated funds, which will be subsequently lent to the AHBs.
I thank the Minister of State for that reply and for his engagement, particularly on the review. I note that €1.1 billion being lent for SMEs and mortgages. Will he please update the House on the three commitments contained within the programme for Government, one of which is the status of the review with the policy framework with the credit unions and how they are operating? What action is being taken to enable and support the credit union movement to grow? I also note the 18% increase in the loan book. How are he and his Department supporting credit unions in expanding their services to encourage community development? Finally, I ask the Minister of State to provide an update on these commitments, either to the House this evening or in written form.
First, the policy review referred to in the programme for Government is at an advanced stage. In the coming weeks, we will have a clear timeline for that process, but it is imminent.
Second, growing the credit union movement, as referenced in the programme for Government, is essentially about growing the credit unions' loan book. They have adequate deposits and savings. They do not need to grow those to any great extent. In fact, the extent of their savings can cause them financial difficulties in the negative interest rate environment we are in at the moment. I met specifically with all the main credit union organisations in light of a number of banks closing branches in many towns, cities and rural areas throughout the country to progress the opportunities available in many of these locations where the credit union is the only financial institution left standing. Credit unions have tremendous ability and scope to increase their lending. That does not require further legislative proposals to assist them. I look forward to working with them in that area.
The Minister of State mentioned the credit unions’ willingness to step in, particularly given the closure of bank branches throughout the country. There have been a number of high-profile branch closures, including in my constituency and in Dublin city. Only last week, Shankill in my constituency lost its ATM. Some Deputies might say that that is not the end of the world. However, it is for a community that relies on that ATM to access services.
I also commend Core Credit Union for its proactive nature in expanding its services. That is exactly what the credit unions want to do. They want to expand services, such as loans, savings, current accounts, debit cards, apps, online banking and so on. With the right support from Government and from the Central Bank of Ireland, credit unions say that they can continue to be present in towns and villages, which is important. I acknowledge what the Minister of State is saying about that. The Minister of State might please keep in contact with me about that engagement, to ensure that once the review is complete we know exactly where we are.
I look forward to briefing the Deputy, as well as the opportunity to brief the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, on developments as we progress. A total of 19 credit unions were approved in early 2021 for participation in the Covid-19 credit guarantee scheme. The Government has provided substantial funding for retrofitting. There will have to be some elements of providing funds by the homeowners themselves. The credit unions are the ideal movement to provide that vital type of extra information. The Central Bank of Ireland is looking at some of the services already provided that require its approval, with a view to seeing if some of these can be made exempt. I will come back with further information on that. Some legislation may be required in the areas we are talking about. However, the Central Bank of Ireland is independent of the Government for good reason. Collaboration is the way forward for credit unions because many of the issues I have mentioned are onerous for small individual credit unions. If they collaborate, they can work strongly.