Rónán Mullen (Independent)
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Ba bhreá liom fáilte a chur roimh an Aire Stáit. As the Minister of State is well aware, the credit union movement across the country is facing many issues and challenges. I am concerned about the proposal to combine the community credit unions in Naas and Newbridge. I have particular worries about the management of this proposal and the precedent it might set for the credit union movement across the country, which is a great community movement. The community in Newbridge has been left in a very uncertain position over the last 23 months, since a special manager was appointed to Newbridge credit union on foot of certain developments within that institution. There seems to have been a distinct lack of consultation with the community. It is time for the community to get answers to certain questions.

I would like to put some specific questions to the Minister of State and I would be grateful if I could get answers to each of them. Is there a plan B in the event of the failure of the proposed combination of Newbridge and Naas credit unions? Does the Minister for Finance have other options in place or lined up in the event of the proposed combination failing? Is he open to the recovery plan that has been proposed by people in Newbridge as an alternative? As the Minister of State knows, there is resistance and considerable concern about the proposed merger of the credit unions. What has the special manager achieved for the people of Newbridge and their credit union in the last 23 months? How much has the special manager cost Newbridge credit union at this stage? There is no need for me to labour the issues. This is a matter of considerable concern for the people of Newbridge and for people across the country whose credit unions face particular challenges relating to reserves, etc. I would be very grateful for some specific answers.

Seán Sherlock (Cork East, Labour)
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The Central Bank is responsible for the regulation and supervision of credit unions. That role includes the implementation of resolution action under the Central Bank and Credit Institutions (Resolution) Act 2011, where required. On 13 January 2012, the Central Bank of Ireland secured a High Court order for the appointment of a special manager to Newbridge credit union. Further High Court applications were made to extend the term of appointment of the special manager, the latest being in June 2013. High Court orders were secured for a six-month extension period on each occasion.

The special manager appointment was made because of Central Bank concerns about the high level of loan losses incurred by the credit union which impacted on the level of its reserves. There were also concerns about some of the lending made, which went beyond the traditional type of lending normally provided by credit unions. The extent of the problems at Newbridge means that it is not sustainable for it to continue as a stand-alone entity. As a resolution case with financial difficulties and viability concerns, it also does not meet the statutory conditions for stabilisation support. The Central Bank undertook a process under the Central Bank and Credit Institutions (Resolution) Act 2011 involving the examination of possible combinations with other credit unions. It is in the context of this process that the Naas proposal came on to the table.

It is important to set out the Minister's role in this process. The Central Bank has the statutory role of "resolution authority" under the 2011 Act. The role of the Minister under this process is essentially twofold. First, consultation with the Minister is a requirement under the intervention conditions. This means that the Minister was consulted in respect of the special management order and the associated extensions but does not provide for the Minister to have a decision-making role or a veto. The Minister would also be a consultee in respect of any proposed transfer order. Second, in the event that the Governor of the Central Bank requests the payment of an incentive for a transfer, the Minister's approval is needed for the Central Bank to provide that financial incentive from the resolution fund.

Senators will appreciate that, notwithstanding the extent of media coverage on the situation, the Central Bank process remains subject to strict confidentiality requirements under the High Court order and the Act. That confidentiality restriction applies equally to the Minister as it does to other parties and, therefore, there is a limit to what the Minister is permitted to say on the matter. However, I want to take this opportunity to emphasise once again that the Minister's core objective is to ensure that members' savings are protected notwithstanding the extent of the very real problems of Newbridge Credit Union. This will be the first case where the taxpayer is being called upon to cover the losses at a credit union and to ensure that members' savings will be protected. The money will come from the resolution fund to which the Government has contributed €250 million of taxpayers' money, which is recoupable over time from credit institutions via a levy.

The Minister is fully aware of the strength of feeling locally about the situation at Newbridge Credit Union, which has also been raised by public representatives in recent months. The Minister met with the Newbridge Action Group on 19 September to hear its concerns about the process and to afford the group an opportunity to outline its alternative proposals. Following that meeting, the agreed next steps were for the Newbridge Action Group to submit its proposal to the Minister expeditiously. As agreed at the meeting with the action group, on receipt of its alternative proposal, the Minister forwarded it to Professor Honohan, Governor of the Central Bank, with a view to a meeting between the Central Bank and the action group. This is now a matter for the Central Bank and I understand the meeting with the group took place last week.

In conclusion, the Central Bank continues to work under the provisions of the High Court Order and the Act to bring a conclusion to the intervention at Newbridge. The focus of the Minister in his limited role under the Act is to secure the protection of members' savings and he had encouraged the Central Bank to progress this issue with a view to an expeditious conclusion.

Rónán Mullen (Independent)
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I thank the Minister of State for his response. I appreciate what he says about the limitations on the Minister's role. The fact remains that there is considerable disquiet. The central question, which has still to be answered, is what will happen if the proposed merger of the two credit unions fails. There are reports of an increase in loan sharks in Newbridge. People are worried about their savings across the country. I hear what the Minister of State says about the fund that is available to guarantee people's savings, which is the most important thing. However, people feel that the Central Bank wields unaccountable power without sufficient consultation. These credit unions have, after all, been built up by communities across the country and it is probably time that people heard about what is going to happen in the area.