Radical shake-up on cards after U-turn by credit union body
THE largest representative body for credit unions has accepted sweeping changes recommended for the movement by a government commission.
Irish League of Credit Unions president Jimmy Johnstone will tell member credit unions in a letter to go out on Monday that the body will not resist the shake-up of the sector.
The league has 393 member credit unions in Republic, out of a total of 408. Each credit union is owned and run separately.
Up to now, the league has been fiercely resisting regulatory changes.
Last month an initial report from the government-appointed commission found that some 56 credit unions have insufficient capital buffers to withstand loan losses.
Most of these credit unions are likely to end up merged with stronger ones.
The commission, headed by Prof Donal McKillop, also recommended stronger governance rules for credit unions and the setting up of a statutory stabilisation fund among a range of tough new rules. The commission found that arrears to the value of €1bn have been run up by credit union members.
Mr Johnstone's letter tells his members: "The initial recommendations of the commission are to be welcomed and they fulfil the commission's mandate with regard to strengthening the regulatory framework and informing new legislation."
He goes on to say the recommendations will lay the foundation for strengthening and revitalising credit unions and lead to credit unions playing an increasing role in providing financial services to members.
He said the credit union movement faced huge challenges but it could overcome these.
The work of the commission is expected to herald large-scale consolidation in the credit union sector. This will not mean that towns and villages will be left without a credit unions.
But instead of each credit union being owned and operated locally and having its own board, a number of credit unions will come together with one board and one balance sheet.