Ciara Conway (Waterford, Labour)
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199. To ask the Minister for Finance his views on the recent announcement by the Central Bank to grant permission to wind up a credit union (details supplied) and to allow it to be taken over by a bank; if he will respond to recent commentary that 56 credit unions countrywide were found to have insufficient capital as per a report by the Credit Union Commission; his views on the future role of credit unions; and if there will be a requirement for any other credit unions to merge in the future. [49294/13]

Michael Noonan (Limerick City, Fine Gael)
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The Central Bank has secured a High Court order to transfer the assets and liabilities of Newbridge Credit Union to Permanent TSB; Newbridge Credit Union has not been wound-up. In serving the High Court order, the Central Bank had to make a case to the Court that winding up was not in the public interest. The resolution report (available at www.centralbank.ie) sets out the detailed Central Bank case on this point, including the fact that winding up, or liquidation, would have led to losses by savers at Newbridge Credit Union. I recognise the important role of credit unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions and I am determined to support a strengthened credit union movement and would encourage the movement to work with its stronger credit unions so they can provide a viable option for assisting weaker credit unions.

The figure of 56 credit unions referred to in the question is taken from the Report of the Commission on Credit Unions. However, the Central Bank has provided updated statistics based on data as at 30 September 2013. These show that some 20 credit unions have reported regulatory reserves below the minimum requirement of 10 per cent of assets, giving rise to a capital shortfall in the region of €11 million in total.

The Commission on Credit Unions, in its Report, made a number of recommendations regarding the future of credit unions. These are being implemented in the tiered regulatory approach and will see some credit unions opting to provide additional services. The core objective of these reforms is to provide the most effective regulatory structure for credit unions, taking account of their not-for-profit mandate, their volunteer ethos and community focus, while paying due regard to the need to fully protect members’ savings and financial stability.

The restructuring process will be overseen by the Credit Union Restructuring Board (ReBo) which is an independent statutory body established by the 2012 Act. Restructuring will be carried out on a voluntary, incentivised and time-bound basis and €250 million has been allocated to the Credit Union Fund to support this process.

In addition, the resolution process may also involve the transfer of assets and liabilities of credit unions. The Resolution Fund contains €250 to support resolution action and was used for the transfer of assets and liabilities of Newbridge Credit Union to Permanent TSB.