Seamus Coffey: More credit union failures are inevitable – and we'll pay price
Newbridge Credit Union is insolvent. On its balance sheet the liabilities it owes exceed the assets it owns by €8m. Under credit union regulations the value of a credit union's assets must be at least 10pc greater than the value of its liabilities. For Newbridge Credit Union the current figure is minus 10pc.
One asset that Newbridge Credit Union has is its office premises. This premises was completely rebuilt in 2006 and was the largest item on the fixed-asset register. However, boom-time values for land and commercial property are no longer applicable today and the current value of the premises needs to be recorded in the financial accounts.
In 2012, another credit union investigated the possibility of a merger with Newbridge Credit Union and estimated that a premises writedown of approximately €15m would have to be allowed for before the merger could proceed.