Board of Credit Union hits back after Central Bank secures High Court order to wind it up
The Board of wound up credit union, Berehaven Credit Union, has hit back at the decision to appoint liquidators and said that lending restrictions imposed by the Central Bank meant it was “destined to fail”.
In a statement released this evening, the Board accepted that there may have been “poor goverance and oversight” in the past, but steps had been taken to improve the conditions.
“Whilst the Credit Union did everything it could to address the liability side of the business, it was impaired in growing its loan book by the severe restrictions placed on it by the Central Bank.”
The statement reads: “The Board worked hard to maintain the viability of the Credit Union by addressing its debt provisioning and its deficit by reducing it from €800,000 to €60,000 in the space of four years.”
The statement also countered the Central Bank’s assertion that the public’s interest had been served.
“Due to its isolation, where it is forty miles from the nearest Credit Union, it is simply not credible to say that the public interest has been safeguarded.”
The Board also said that they did everything in their power “to fight the closure but, without the necessary financial support from the Irish League of Credit Unions, they could not survive.”
Earlier today, the credit union with 3,500 members became the first in the State to be wound up after a High Court gave the shut-down the go-ahead.
Berehaven Credit Union in Co Cork is to be wound up to avoid what the court was told was the liklihoood of a “disorderly collapse”.
It is understood there is €11.3m in savings belonging to the members.
This afternoon the President of the High Court Mr Justice Nicholas Kearns appointed insolvency practioners Jim Hamilton and David O’Connor OF BDO Ireland as provisional liquidators of Berehaven, located in Castletownbere in Co Cork.
Mr Justice Kearns said he was satisfied to appoint the provisional liquidators, after being informed by Paul Gallagher SC for the Central Bank that seeking to have an orderly wind up of Berehaven CU was “in the the public interest”.
Counsel said the Central Bank was also of the opinion Berehaven credit union “may be unable to to meet its obligations to creditors”.
The court heard that two reviews conducted in 2010 and earlier this year identified corporate governance failure at the CU, which had not been rectified.
The move to wind up the credit union was taken by the Central Bank over concerns about bad lending, a sharp fall in the value of the lender’s assets and governance issues.
Savers will get their money back under the State’s deposit guarantee scheme, which guarnatees up to €100,000 for account holders.
But the move is set to send shockwaves to the three million members of Credit Unions nationally.
Last year Newbridge Credit Union in Kildare had its operations transferred into Permanent TSB bank.