AN INDEPENDENT REPORT into the health of Ireland’s credit unions has recommended that the government should be able to intervene and recapitalise certain credit unions if need be.
The interim report of the Commission on Credit Unions said that the overwhelming majority of Ireland’s credit unions were in compliance with their requirements to hold a certain amount of their assets in reserve.
There were 27 credit unions which were “seriously undercapitalised”, however.
The report recommended that the Central Bank and Credit Institutions (Resolution) (No.2) Bill, currently before the Oireachtas, should also include resolution powers for credit unions where intervention is needed.
It also recommends the establishment of a ‘stabilisation mechanism’, to be funded by the credit unions and managed by the Central Bank, and the introduction of a ‘prudential rulebook’ outlining any regulatory requirements.
The report also recommends that credit unions remain subject to the government’s bank deposit guarantee, and that the Central Bank should have the power to inspect, investigate and gather information on credit unions.
Finance minister Michael Noonan said the report provided “important recommendations” and that he would begin to examine what legislation may be needed to implement them.
“The government recognises the important role of credit unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions,” he said.
“The establishment of the Commission on Credit Unions and the publication of its Interim Report represent an important milestone in strengthening the credit union movement.”
Noonan added that the government was committed to ensuring that the sector remained “stable”.
Noonan has previously suggested that Ireland could commit up to €1bn to resolving the credit union sector.
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