Michael Healy-Rae (Kerry South, Independent)
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Question 106: To ask the Minister for Finance his views regarding the regulation of credit unions (details supplied); and if he will make a statement on the matter. [30066/11]

Michael Healy-Rae (Kerry South, Independent)
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Question 107: To ask the Minister for Finance his view on whether specifying and laying down the total loan amount that can be issued each month is hindering the effectiveness of credit unions; and if he will make a statement on the matter. [30067/11]

Michael Healy-Rae (Kerry South, Independent)
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Question 108: To ask the Minister for Finance his view on whether linking the total loan amount issued to cash received without reference to assets, reserves, liquidity and so on is hindering the effectiveness of credit unions; and if he will make a statement on the matter. [30068/11]

Michael Healy-Rae (Kerry South, Independent)
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Question 109: To ask the Minister for Finance his view on whether imposing specific loan terms in addition to existing limits is not helpful to credit unions; and if he will make a statement on the matter. [30069/11]

Michael Healy-Rae (Kerry South, Independent)
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Question 110: To ask the Minister for Finance his view on the fact that the approximately 400 credit unions are financially healthy, that they have €12 billion in assets, loans of €5 million and €1.7 billion in reserves, but over-regulation is actually threatening the stability of the credit unions by adversely affecting their most important source of income, loan interests; his further views on whether curtailing the ability to lend inhibits their ability to generate income; and if he will make a statement on the matter. [30070/11]

Michael Healy-Rae (Kerry South, Independent)
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Question 111: To ask the Minister for Finance his views on whether the banning of all commercial business loans affects the self-employed, tradesmen, farmers and so on; his further view on whether this is affecting the effectiveness of credit unions; and if he will make a statement on the matter. [30072/11]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 106 to 111, inclusive, together.

As Minister for Finance, my role is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. It would not be appropriate for me, as Minister for Finance, to examine or adjudicate on whether the placing of lending restrictions is necessary on a case by case basis. I believe that such action would represent interference in the work of the independent financial regulator.

The Registrar of Credit Unions has imposed lending restrictions on a significant number of credit unions in recent months. Within his independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members. It is on this basis that the Registrar has put lending restrictions in place. Restrictions are imposed on a case-by-case basis and are reviewed regularly. The Registrar advises that no new policy is being implemented and that this is part of normal regulation and supervision of the sector.

The Registrar advises me that the restrictions are structured to allow credit unions to lend a higher number of small value loans to the broader membership, thereby reducing concentration risk. He also advises that initial analysis indicates that the credit unions which are restricted continue to have higher levels of arrears than those which are not and this remains a concern. The Registrar closely monitors and interacts with those credit unions where lending restrictions have been imposed.

Any restriction on a credit union is determined by the Registrar taking account of its financial data including the level of its lending, average loan size, its arrears trends and bad debt provision levels. Credit unions are able to continue to lend to members within their financial capacity to do so. If a credit union can demonstrate an improved financial position then such restrictions can be reviewed. The imposition of these restrictions is not considered lightly and the type of lending restrictions imposed takes account of the particular business profile and financial position of each credit union concerned. The type of lending restrictions can include maximum individual loan size and overall maximum monthly lending limits.

It is important to provide an accurate picture of the degree to which the Registrar has imposed lending restrictions and the type of restrictions being imposed.

About 50% of credit unions are subject to lending restrictions at present. Almost all credit unions with a lending restriction have a maximum individual loan size restriction. Of the credit unions with lending restrictions: 70% can lend €20,000 or more to an individual member; only 9 are restricted to loans of less than €10,000 to an individual member; and just 1 credit union is restricted to lending less than €5,000 per member.

With regard to commercial lending, commercial lending restrictions apply to approximately a third of credit unions. This does not preclude credit unions from lending small business type loans if appropriate in certain circumstances. It goes without saying that a credit union must have the relevant skill and expertise to evaluate and manage this category of lending and the resulting exposure to the credit union.