€10m already paid out to troubled credit union's members
THOUSANDS of savers who had money in a Cork credit union that was forcibly shut down last week have already been compensated.
Just a week after Berehaven Credit Union was closed on foot of an order from the High Court around €10m has been paid out to the savers.
The Central Bank got the High Court to agree that Berehaven CU be liquidated and its assets sold off last week. It has 3,500 members with €11m in savings.
Now the Central Bank says €10m in compensation payments have been made to 3,100 depositors from the State's deposit guarantee scheme.
"Cheques have now been posted to over 85pc of members of Berehaven Credit Union, which was placed into liquidation on July 23 last," the Central Bank said.
Remaining deposits are being progressed as quickly as possible and it is expected that further payments will be made shortly, a spokeswoman for the bank said.
Depositors were told they do not need to make any application for repayment as this will be processed automatically.
Banks and other deposit takers pay a levy to fund the State deposit guarantee scheme. It guarantees up to €100,000 per person.
Directors of Berehaven CU, located in Castletownbere in Co Cork, questioned the forced closure of the lender, claiming that restrictions on the amount of lending it could do made it impossible to trade its way out of difficulties.
But Mr Justice Kearns decided last week that he was satisfied to appoint the provisional liquidators after being informed by Paul Gallagher SC for the Central Bank that seeking to have an orderly wind up of Berehaven CU was "in the the public interest".
Counsel said the Central Bank was also of the opinion Berehaven credit union "may be unable to to meet its obligations to creditors".
The court heard that two reviews conducted in 2010 and earlier this year identified corporate governance failure at the credit union, which had not been rectified.
The move to wind up the credit union was taken by the Central Bank over concerns about bad lending, a sharp fall in the value of the lender's assets, poor internal controls and governance issues. Efforts are being made to have a branch of Bantry Credit Union opened in Castletownbere.
FG TD for West Cork, Noel Harrington called for a credit union presence to be maintained in Castletownbere through a satellite service provided by Bantry Credit Union, 50km away.