Thursday 14 November 2019

Ex-Postbank boss Sweeney fronts credit unions' bid to enter the mortgage market

Margaret Sweeney
Margaret Sweeney

Sarah McCabe

The national body for credit unions is planning a mortgage business. The Irish League of Credit Unions (ILCU) has hired Margaret Sweeney, former chief executive of Postbank, to lead the initiative.

Ms Sweeney is best known as the first female boss of an Irish bank - the ill-fated PostBank, a joint venture between An Post and Belgian bank Fortis. It was closed in 2010.

She also sits on the board of fast-growing payments firm Realex and is the former deputy chief executive of Aer Rianta.

The project may involve asking the country's credit unions to pool their deposits and lending capabilities.

The plans are at a preliminary stage. The ILCU, which represents 469 credit unions in Ireland, both North and South, with 3.3 million members, has set up a home loan group. It is conducting a feasibility study into how mortgages might be made available to credit union members. It is due to publish a draft report on the matter next week.

The report will be presented to the ILCU's board. If approved, the proposals will be presented to the country's credit unions and Central Bank.

A move into the mortgage business would be a major departure for the country's credit unions.

At present most of their lending is done via small personal loans for cars, holidays and home improvements. The average loan is around €6,000.

But the country's credit unions are very keen to move into different, bigger types of loans, it is understood. They have a large pool of cash available in the form of customer deposits which is not being used as effectively as it could be.

The plans come as the Irish mortgage market finally begins to show signs of recovery. With interest rates at record lows, it is cheaper for lenders to lend to customers than ever before.

Competition is heating up. Increasingly enticing offers are being rolled out, like Bank of Ireland's promise to pay stamp duty for first time buyers, or incentives for switching mortgage providers.

The ILCU's move came about, a spokesperson said, "as a result of many credit unions being asked for additional products of this nature.

"This group (which comprises three League board directors, one league supervisor and two League staff), together with the help of an external consultant (Margaret Sweeney) have been conducting a feasibility study to scope out how home loans might be made available by the credit union movement to credit union members.

"A first draft of this initial scoping report is due to be considered by the group next week. It is intended that the report (when finalised) will be presented to the League Board by the Home Loan Group.

"A decision will then have to be made on whether there is a feasible project to explore further with credit unions and with the Central Bank."

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