independent

Monday 21 April 2014

Credit Union merger will cost millions in bailout funds

Finance Minister Noonan

THE controversial Central Bank proposal to merge Newbridge Credit Union with its neighbour, Naas, will require a multi-million-euro bailout for the new enlarged entity, it has emerged.

The Central Bank would not reveal yesterday how much new capital will have to be put into the new body.

But it is understood the merged body will need to stump up for the €2m cost of the special manager appointed by the courts 18 months ago to run Newbridge.

Finance Minister Michael Noonan has set aside €500m to recapitalise troubled credit unions that are being merged with stronger ones.

Combining the two Kildare credit unions will give the new organisation a membership of 54,000 – more than twice the size of some other community credit unions in the country.

However, members of Newbridge have vowed to take High Court action to stop regulators forcing it into a merger with its smaller neighbour.

The angry response follows confirmation that the Central Bank has proposed that Newbridge Credit Union is to have its business transferred to nearby Naas. Newbridge would retain a sub-office in the town but would be owned by the combined membership of the two lenders.

Locals see this as control transferring to the neighbouring lender.

Mr Noonan said he supported the Central Bank proposal to merge Newbridge's activities with the smaller Naas operation.

The Irish Independent has learnt that directors of Newbridge were due to be briefed yesterday by Central Bank officials on the proposed merger, but the meeting was cancelled at the last minute.

A spokeswoman for the regulator denied the proposed merger had run into problems after locals threatened legal action.

Time constraints meant the meeting had been cancelled but a new one would be organised, she said.

Directors of Newbridge will have to approve the merger. But it is understood the members will not get to vote on the proposed tie-up.

And the Newbridge Chamber of Commerce said the uncertainty over the credit union could impact local businesses.

President of the business body David O'Reilly said: "Reports that Newbridge Credit Union is to cease under its current status will impact severely on commercial activity in the town.

"If its members are uncertain as to how their savings/loans are being looked after, they could hesitate or stop spending, which is the lifeblood of the town," he said.

The chamber is urgently calling for transparency around this investigation by the special manager and the Central Bank and for details to be published.

Members of the Newbridge Credit Union Action Group have promised to challenge the merger move in the High Court.

Willie Crowley of the group said he and his members would be prepared to go to jail to stop the Central Bank's plans.

Irish Independent

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