Written answers

Thursday, 16 December 2021

Photo of Holly CairnsHolly Cairns (Cork South West, Social Democrats)
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119. To ask the Minister for Finance the steps he is taking to enable the credit union movement to grow as a key provider of community banking in the country. [62343/21]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Programme for Government includes a number of commitments in relation to the credit union sector.

As part of the Review of the Policy Framework, Minister Fleming conducted extensive stakeholder engagement, meeting with the representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee, the Registrar of Credit Unions and individual credit unions. The information gained from these meetings will help inform the next steps taken by Government. We intend to issue proposals emanating from the Review of the Policy Framework for consultation shortly.

In terms of supporting the sector to provide essential financial services to local communities, the following are some recent developments which highlight the potential of the sector to fulfil a role in relation to community banking.

Review of Lending and Investment Regulations

The Central Bank has in recent years reviewed both the lending and investment frameworks. Since 1 January 2020, credit unions now have a combined capacity to provide up to €1.1 billion in additional SME and mortgage loans, with further capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As of June 2021, credit unions had a combined mortgage and SME loan book of circa €372 million, an increase of 18% year-on-year.

Credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including Tier 3 Approved Housing Bodies (AHBs). I am pleased to share with the Deputy that two credit union backed funds have received approval from the Central Bank. Credit unions will be able to invest up to €900 million in these regulated funds, which will subsequently lend to AHBs.

SME Lending

Nineteen credit unions were approved in early 2021 for participation in the Covid-19 Credit Guarantee Scheme. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book. Further, in November five credit unions were announced as participants in the €330m Brexit Impact Loan Scheme (BILS). The BILS is a successor to the Brexit Loan Scheme and provides low-cost loans of €25,000 to €1.5m to eligible Brexit-impacted businesses. While its predecessor had been available through participating banks, the BILS will now also be available through participating credit unions, ensuring wider accessibility of the scheme.

In total, SME lending has grown 5.6% year on year to end June 2021.

Access to Finance for Retrofit

The Government significantly increased the funding available to support retrofit in Budget 2022. My officials have been engaging with stakeholders to support increased credit union participation in green retrofit loan schemes.

Other Services

Other than member savings and lending, in order to provide “additional services”, a credit union must be approved by the Central Bank.

66 credit unions are approved to provide current accounts.

The Central Bank has prescribed a list of exempt services which may be provided without requiring approval. The Central Bank is undertaking a review of the Exempt Services Schedule to ensure that the services listed reflect the current financial services landscape. The Central Bank will commence a public consultation shortly – seeking views from stakeholders on the proposed changes arising from this review.


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