THE number of credit unions in the country could be halved over the next five years, as they merge in order to survive.
A report from the European Commission last week warned Ireland's deficit could grow because of the potential bailout of several credit unions.
Yesterday, an industry expert said the 407 lenders needed to act now to protect themselves or it will be too late.
"The credit union situation is a big worry for the authorities and Government," said David Jackson of RGP, a consultancy that works with a number of credit unions in Ireland.
"This year will be decision time," he said. "I wouldn't be surprised to see the number of independent credit unions fall by half within five years.
"Some unions are okay. Those wondering if they should seek a merger should try to do it now.
"Those that are in trouble still have options but they have to decide what they want."
Merging completely would mean long-term savings but the process is likely to be costly.
"The other option is for a number of small firms to band together in a co-op type structure . . . that would help keep costs down," he said.
Government has set aside €500m for credit union restructuring, but Mr Jackson expected it to be too little. Credit unions had about €1bn worth of loans in arrears by the end of 2011.