Sunday 17 November 2019

Blow for Credit Union reform as regulator of sector takes up UAE role

Charlie Weston Personal Finance Editor

THE State's efforts to restructure the credit union movement have received a blow with the confirmation that the regulator of the sector is leaving his job.

Registrar of credit unions James O'Brien is to leave the Central Bank at the end of the year to take up a senior job as a regulator in the United Arab Emirates. He will be involved in banking regulation there.

The Central Bank said an announcement on a new registrar for credit unions will be made soon.

Mr O'Brien is understood to feel that the position developing a regulatory structure in the UAE is too good to pass up.

Sources said Mr O'Brien had done much of the heavy lifting in turning around the credit union sector here. But there was disappointment in the Central Bank and the Department of Finance that he is leaving.

A new credit union bill was published in the past few weeks, which was understood to be heavily influenced by Mr O'Brien.

The extent of problems within the sector came into focus when it emerged that the Central Bank has 100 credit unions under close supervision over fears about rising loan arrears.

This is a quarter of the credit unions in the state.

Thousands of loans at the affected credit unions are not being repaid, putting huge financial pressure on the balance sheets.

The locally owned lenders are so short of funds they are unable to put sufficient money aside to cover losses in the event that loans do not get repaid.

Some €1bn of loans across the credit union sector are in arrears -- defined as payments being 10 weeks or more behind. This works out at around one-fifth of loans.

Now the plan is to merge failing credit unions with stronger ones, while the State has set aside €500m to beef up the funds of weaker players.

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