Credit union in capital told to restrict lending and cancel AGM
Regulator calls for increased provision for bad debts and no dividend for first time in 40 years
Published 22/03/2011 | 07:44
AN inner city credit union has been ordered to call off its annual general meeting, restrict lending and not pay a dividend.
It is the first time in 40 years that Halston Street Credit Union, based in Dublin's Capel Street, has been unable to pay a dividend.
The credit union, whose members are predominantly lower income, was told by regulators to increase its provisions for bad debts. This forced it to report a deficit for last year, a copy of the accounts for the credit union, seen by the Irish Independent' shows.
A spokesman for the registrar of credit unions, James O'Brien, denied regulators were being heavy handed with the credit union.
Mr O'Brien, who is attached to the Central Bank, is understood to have told Halston Street to put its annual general meeting on hold. The AGM was due to be held at the start of this month.
"Any actions taken by the Central Bank are taken in the best interests of credit union members," a spokeswoman said.
A number of credit unions have been in contact with this newspaper recently complaining that regulators are taking what they consider to be an excessively oppressive regulatory approach.
This view is rejected by regulators. It is understood that regulators are to meet executives from Halston Street this week to discuss the accounts.
The accounts reveal that regulators have ordered no dividend to be paid for 2010 and no interest rebates to be given, while no loans over €10,000 are to be issued.
Chairwoman Jane Lynch says in the accounts: "Unfortunately, the regulator forced us to increase our bad debts provision for 2010, resulting in a deficit for the year."
The need to make greater provision for bad debts saw the deficit hit €278,565.
The credit union has total loans of €10.7m, with €1.5m now put aside to cover bad debts. The bad debt provision represents around 15pc of the value of total loans outstanding.
Liabilities, or deposits, are €12.9m, while assets total €13.5m. The assets are largely made up of loans to members. The accounts make clear that 1,688 loans, totalling almost €4m, were issued last year. Most of these were "of an emergency nature".
Many members of the credit union are experiencing difficulty maintaining their agreed repayments, according to the accounts. Since last year, a full-time credit controller has been appointed in a bid to collect loans that are in arrears.
Halston Credit Union had no comment when contacted.