Noonan admits some credit unions under severe strain
FINANCE Minister Michael Noonan admitted yesterday that a number of credit unions are under severe financial strain.
But he insisted that the problems could be ironed out and the Central Bank and Government stood ready to assist lenders in difficulty.
Mr Noonan was responding to reports in this newspaper that the Central Bank is set to take control of several more credit unions this year as huge numbers of borrowers are unable to repay their loans.
He said he did not see problems with the credit union movement in general, but there were difficulties in some credit unions, which could be fixed.
Last week, the High Court appointed a special manager to take over at Newbridge Credit Union amid fears over the funding levels at the lender.
This has heightened fears that other credit unions will not now survive without state intervention.
Speaking ahead of a Cabinet meeting yesterday morning, Mr Noonan said the State would back any credit union in difficulty.
"People who have loans or deposits in credit unions can rest easy; the Central Bank and the Government stand ready to assist if there are difficulties," he said.
"But we don't see a difficulty with the credit union movement in general, we see difficulties, which are remediable, in some credit unions, big and small."
His comment came as new figures show that there has been a 50pc rise in the number of court judgments awarded in favour of credit unions against borrowers. This sharp rise in judgments last year was an indication of the financial pressures credit unions are under.
Research by business information company VisionNet shows that 802 judgments were secured by community lenders last year, with a total value of €14m.
Up to 100 of the 408 credit unions could eventually be merged with stronger ones, with at least 10 considering merging ahead of moves by regulators to force a restructuring.
A government commission reported in October that there were 26 unions where there were serious concerns about the amount of money they had set aside to cover loan losses.
Mr Noonan has set aside €250m this year and the same again for next year to pump into struggling credit unions.