Newbridge credit union merger plan would have cost €75m
Published 12/12/2013 | 02:30
A PROPOSAL to merge the controversial Newbridge Credit Union with one in Offaly would have landed taxpayers with an even bigger bill than the eventual bailout cost.
Tullamore Credit Union had looked seriously at taking over Newbridge but it wanted €75m as an "incentive", it has emerged.
Troubled Newbridge Credit Union was effectively dissolved last month when its savings and loans were taken over by Permanent TSB after a late-night sitting of the High Court approved the transfer.
State-rescued Permanent TSB got €54m to effect the takeover, but other costs are set to see the taxpayer bill climb to €57m.
Now it has emerged from previously confidential documents that the Central Bank spent the summer of 2012 discussing a merger of Newbridge with Tullamore Credit Union.
This was revealed after the Central Bank was told by the High Court that it could release publicly some of the material surrounding Newbridge Credit Union (NCU).
The President of the High Court, Mr Justice Nicholas Kearns, made the publication orders with the consent of the directors of NCU on condition that their affidavits, which are strongly critical of the bank's intervention, are also made public.
A gagging order had been slapped on all court documents in relation to NCU after the Central Bank persuaded the High Court to appoint a "special manager" to the Kildare community lender in January 2012.
In one of the affidavits, it is revealed that extension discussions took place with a credit union interested in taking over the running of NCU. This credit union is not named but it is understood to be Tullamore in Co Offaly.
The affidavit of the Central Bank's Gregory Dempsey states: "As part of the bid, the bidder has requested a financial incentive to assume NCU's entire engagement, assets and liabilities amounting to €78,430,000."
The plans to merge Newbridge with Tullamore failed when the board of the Offaly lender decided the deal was too risky.
Attempts were then made to arrange a tie-up with nearby Naas. Previously disclosed documents show that Naas was seeking €69m to cover likely losses.
New accounts show that Newbridge had a loss of €13.2m in 2012 after losing €13.6m the previous year. A small profit of €500,000 was recorded in the first six months of this year.
But court documents submitted by special manager Luke Charleton of Ernst & Young show that loan arrears were building up and €1.2m in savings was being withdrawn every month.
Almost half of the Kildare credit union's loans were in trouble by March of this year.
In one of the affidavits the former chairman of the board of Newbridge said the Central Bank's "ill-conceived intervention" was "most regrettable".
He said it had "resulted in the loss of credit union services to Newbridge and a loss of confidence in the wider credit union sector".