DT Fine Art

ANNE LUCEY in Killarney

THE GOVERNMENT has set aside half a billion euros the to support the restructuring of credit unions over the next two years, Minister for Finance said in Killarney this weekend.

Some 250 million had been earmarked for this year and it was envisaged the same would be required next year, Michael Noonan said.

Credit unions had survived the financial crisis better than some of the household names in the financial sector here, he added.

A small number of the total were in difficulty. However, the challenges facing the credit unions here were very real.

The Minister was speaking at the Irish League of Credit Unions annual meeting. The league represents about 90 per cent of Irish credit unions.

The Government was committed to credit unions and was moving quickly on restructuring, Mr Noonan told more than 2,000 delegates in his address on Saturday morning.

He said the credit union movement had been essential to Irish society and local communities for more than 50 years.

The Government had given priority to the Commission on Credit Unions and it had provided a landmark report in the past weeks, said Mr Noonan.

In the coming weeks a restructuring board would be established to bring changes to the sector, but not all credit unions would need restructuring.

The forthcoming Credit Union Bill will give effect to the changes to regulation and governance outlined in the report, which are essential for the development of the sector, he said.

The changes would be introduced on a phased basis over time but would also allow credit unions to develop and grow.

Key aims would include that members savings would be protected and that the credit union ethos and identity would be preserved.

About 25 credit unions were seriously undercapitalised out of 403, Mr Noonan told reporters.

A spokeswoman for the league stressed that any funding provided by the exchequer to credit unions in the initial stages of restructuring would be paid back.

Chief executive of the league Kieron Brennan, said restructuring would present an opportunity for credit unions to become a third pillar bank and individual credit unions sharing resources would lead to better services for members, such as online banking.

The meeting was the first opportunity for the league to discuss the report of the commission collectively. While credit union managements were understood to be happy with the recommendations on restructuring, seeing an opportunity to become a third banking force, there was some nervousness among members on Saturday.

They were reassured the credit union footprint that is the presence in local communities out of which they developed over the past 50 years would remain.

While some credit unions would share services such as back-office administration, offices in communities would remain open and amalgamation would allow more services for members.

Mr Brennan said the debate had been insightful. He said delegates, representing 400 credit unions, were happy to embrace the changes and rise to the challenges.

The concern was that the credit union ethos would be kept, to make sure any restructuring would not undermine their ability to continue to help those less well off and that the marginalised were taken care of.

The annual meeting has been told that the movements total assets now stand at almost 13.5 billion. Total savings are almost 11.6 billion and total loans are at 5.36 billion.

Membership of credit unions is almost three million and the Irish movement has the biggest per-capita membership of any other country in Europe.

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