John Deasy (Waterford, Fine Gael)
Link to this: Individually | In context

Question 28: To ask the Minister for Finance his plans to change the lending restrictions imposed by the Registrar of Credit Unions, which places a complete ban on credit unions lending commercial or business loans that is hampering small and medium enterprises; and if he will make a statement on the matter. [38432/11]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context

The imposition of lending restrictions is the responsibility of the Registrar of Credit Unions, who is the independent regulator for credit unions. 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. This is part of normal regulation and supervision of the sector. 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 regulator.

The Registrar has put lending restrictions in place in order to protect the savings of members in credit unions and to ensure that credit unions focus on risks when making lending decisions. Restrictions are imposed on a case-by-case basis and are reviewed regularly. The type of lending restrictions can include maximum individual loan size, overall maximum monthly lending limits and restrictions on business lending.

The Registrar has advised that 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 · Less than 4% of credit unions 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. 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. As part of the work to build liquidity levels in the credit union sector, the Central Bank introduced maximum monthly lending limits in a number of credit unions. Currently, maximum monthly lending limit restrictions are in place in a small proportion of credit unions .