Credit unions to pay millions for bail-out fund
CREDIT unions will be forced to stump up millions of euro to build up a fund to bail-out unions that get into financial trouble.
The Department of Finance has proposed a new levy on the sector to be used when credit unions run short of reserves.
A fund of €30m would be needed for this “stabilisation fund”, the department said today.
The proposal is set out in a consultation paper published by the department. The views of credit unions are being sought on the new levy plan before a final decision is made on it at the end of April.
The levy would raise €5m a year until a fund of €30m is accumulated, the department proposed.
The funds would be applied to credit unions which have a level of reserves below the statutory minimum level of 10pc of overall assets but above 7.5pc of their assets.
Some 20 credit unions have reserves below 10pc of their assets at the moment.
The Irish League of Credit Union has its own rescue fund but there is concern that this is not a statutory, and is not open to all credit unions.