Credit union will pay no dividend after branch posts losses of €6m
Roscrea forced to put €9.3m aside to cover bad debts
A CREDIT union in Tipperary has insisted that its members' money is safe after it recorded losses of €6m, was forced to put aside €9.3m to cover bad debts and has had to seek financial assistance from the League of Credit Unions.
Roscrea Credit Union insisted that savings are guaranteed up to €100,000 for each member under the State's deposit guarantee scheme.
Accounts for 2009 show that it has been forced to avail of a guarantee of €3m from the league's savings-protection fund (SPS) -- a bail-out fund for credit unions that are experiencing funding problems.
Members were told at a delayed annual general meeting earlier this month that no dividend would be paid for the foreseeable future.
In a statement to the Irish Independent, acting treasurer Brendan Wright refused to discuss reports that the manager of the credit union was on paid leave.
He said: "The credit union will not comment on any individual member of staff. A management team is in place who are committed to the members and to the credit union continuing to provide the much-needed services to the community."
Mr Wright denied that the credit union's dozen-or-so staff had sought signatures from the public in the town last week, calling for the reinstatement of the manager.
The League of Credit Unions, a representative body for the majority of the country's credit unions, said it was working with the board of Roscrea and "a management team, which is in place".
The league said it wanted to ensure that it has "appropriate loan provisions" in place. It added that Roscrea was complying fully and working with the regulator.
The credit union was forced to put aside €9.3m to cover bad debts last year. This represents 21pc of the total outstanding loans of the organisation, as a copy of the annual accounts, which has been seen by this newspaper, clearly shows.
Asked why the loan provisions were so high, Roscrea Credit Union admitted in a statement that its bad-debt provisions were up €6.7m for the year ended September 2009.
It said: "Provisions are an estimate of loans that are likely to go bad, based on experience and economic conditions.
"The credit union has prudently put aside this provision to reflect a more realistic value for its loans.
"Is is hoped that not all of this provision will be required going forward."
The credit union is understood to have lost money after advancing a number of commercial loans to developers in the past few years.
The registrar of credit unions has consistently called on credit unions to avoid getting involved in commercial lending.
Roscrea's losses for last year were €5.8m, which meant that no dividend could be paid. This compares with a surplus or profit of €632,945 in 2008.
The credit union had assets of €53m last year, down from €55m in 2008.