CREDIT unions across the country face millions in losses following the Government's decision to liquidate Anglo Irish Bank, the Irish Independent has learned.
Up to 12 credit unions could see as much as €1m each wiped out.
Although none of the credit unions are at risk of becoming insolvent, there are fears that one of them will need its own mini bailout if all the funds invested with Anglo are lost.
However, customers' savings are safe – regardless of any losses for the credit unions, which face problems after they invested between €10m and €12m in a complex investment scheme run by Anglo.
The money is now caught up in the liquidation of the former bank as part of last week's promissory note deal.
Credit unions in the home counties of Enda Kenny and Michael Noonan are among those facing a hit.
The credit unions were told two years ago that their money could not be moved from Anglo to AIB for safekeeping, because they were in a special "structured deposit" bond scheme lasting eight years.
And they were reassured that the money was protected by state banking guarantee. But the Department of Finance has confirmed that the credit union money was invested in an "equity-linked bond" with no guarantee that they would get their money back.
It is one of the unexpected consequences of the dramatic liquidation of Irish Bank Resolution Company (IBRC), formerly Anglo, which required an overnight sitting of the Dail and Seanad last week.
The credit-union movement has already been "burned" for €22.4m on junior bond investments in Anglo and €90m on junior bonds in AIB, Bank of Ireland and Permanent TSB.
The country's 403 credit unions had already dealt with the impact of losses from their investments in the bailed out banks two years ago.
The Irish League of Credit Unions is due to have a meeting with IBRC liquidator Kieran Wallace of KPMG today.
A spokeswoman said: "We have raised the matter with the Department of Finance and will continue to press on this issue so that credit unions are not sacrificed for the sake of the banks again."
This newspaper has also learned that Mr Noonan told the Fine Gael parliamentary party meeting this week that he was willing to help credit unions facing losses as a result of the liquidation.
A €250m fund is available for the reorganisation of the credit unions.
However, the Department of Finance insisted that the credit union funds in IBRC were not deposits and therefore were not covered by the guarantee.
A spokesman said that the credit unions had taken out an equity-linked bond from Anglo Irish Bank's private banking unit in 2005
"There was no guarantee investors would get their money back," the spokesman said.
The department said that the decision on whether the funds would be given back to the credit unions was a matter for the IBRC regulator.
There is no threat to the savings of credit union members, which are covered by the state guarantee.
IBRC debt warning