Jack Chambers (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 155 and 159 together.

I thank the Deputy for her questions.

Since January 2020 revised Central Bank Lending Regulations were put into effect, and the following concentration limits have applied to credit union house and business lending:

• Combined house and business lending not to exceed 7.5% of assets of the credit union, with an inner limit of 5% of assets for business lending. This applies to all credit unions.
• Combined house and business lending not to exceed 10% of assets of the credit union, with an inner limit of 5% of assets for business lending. This applies for all credit unions above €50 million assets and with regulatory reserves greater than 12.5%. The majority of credit unions could avail of the 10% limit. To make use of this limit, qualifying credit unions need only notify the Central Bank.
• Combined house and business lending not to exceed 15% of assets of the credit union. This is subject to minimum assets of €100 million and Central Bank approval. 68 credit unions holding more than 70% of sector assets could apply for the 15% limit. The most recent figures provided by the Central bank show that 14 applications for this limit have been approved, with a further 6 in progress. It is my and the Government’s hope that more eligible credit unions will continue to apply for this limit.

The Government is encouraged by the continued growth in both mortgage and commercial lending for credit unions. Year on year to March 2024 mortgage lending has grown from €364.6 million to €614.9 million (an increase of 68.7%) and commercial lending has grown from €151.8 million to €173.8 million (an increase of 14.5%). This lending growth can be further supported through the enabling provisions of the Credit Union (Amendment) Act, such as member referrals.

The sector continues to innovate in regards to mortgage lending and work is well under way to establish a mortgage CUSO, which will initially focus on establishing a common brand and mortgage product. It is expected that this product will be launched by year-end 2024. A sizeable proportion of the sector (77 credit unions) have committed funding to the initiative. The mortgage CUSO will help credit unions play a greater role in house lending.

In terms of business lending, products such as Cultivate (an agri-loan) have proven a great success and can serve as a paradigm for future credit union collaborations. At its inception in 2017, Cultivate loans were only offered by 4 credit unions. Today, 52 credit unions offer Cultivate loans.

Initial analysis completed by the Central Bank estimates that there is €2 billion available secured lending capacity is the sector, based on current regulations. I am aware that Minister Richmond, Minister of State with responsibility for credit unions has engaged with many credit union stakeholders regarding lending limits and other issues facing the sector. I understand that Minister Richmond has engaged with the Central Bank to outline his view that as unutilised lending capacity cannot be transferred between credit unions, these limits need to be considered at an individual credit union level. When limits are assessed from this perspective, there is an economies of scale issue that has to be considered.

The recently published ICURN Peer Review Report highlighted that, “Without some liberalisation of the limits and flexibility, the Amendment Bill may not have the anticipated positive impact”. The ICURN Report also supported separation of limits for house and business lending given the different risk profiles of these types of lending.

The Central Bank are currently conducting a review of the changes to the lending framework introduced in January 2020, with an initial analysis expected by H2 2024. I trust the Central Bank will reflect on the views of the credit union stakeholders and the ICURN report when considering any potential amendments to the regulations.