Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

64. To ask the Minister for Finance the number of credit unions subject to lending restrictions; the nature of these restrictions, by number; and if he will make a statement on the matter. [42167/15]

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

My role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.

The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her 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. As such the imposition of lending restrictions is a matter for the Registrar who recognises the need for credit unions to grow income as a requirement for sector viability and for the need for credit unions to ensure that they are in a position to grow their income from their traditional lending business.

I have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.

I have been further informed by the Central Bank that almost all credit unions with a lending restriction in place have a maximum individual loan size restriction. In the majority of cases, the maximum individual loan size is in excess of €10,000 as detailed in the following table. 

As at 23 November 2015

These figures are based on 342 credit unions currently active, registered and not awaiting cancellation.

For those credit unions with an individual loan size restriction, the level at which the limit is imposed ensures that the vast majority of these credit unions can continue to make loans significantly more than the average value for gross loans outstanding for the sector of approximately €6,000 with the majority of restrictions enabling credit unions to lend amounts of between €10,000 and €30,000. Only 3 credit unions have a maximum loan size restriction of less than €10,000. These lending restrictions are reviewed on a regular basis to determine whether or not they are still set at appropriate levels.

In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, could apply to the Central Bank for a review of their lending restriction. The closing date for receipt of applications to review lending restrictions under this initiative was 30 September 2015. To date the Central Bank has reviewed almost 60% of applications received. Of the applications which have been fully reviewed, 83% have had their lending restriction lifted and are now operating under the board's stated credit risk appetite. Approximately 40% of credit unions that applied, submitted their application in September and these applications are currently under review.

The review has reduced the number of credit unions with lending restrictions as currently approximately 39% of credit unions have a lending restriction compared with 52% a the start of the review.

The Government's priorities remain the protection of members' savings, the financial stability of credit unions and the sector overall and it is absolutely determined to continue to support a strengthened and growing credit union movement.