CREDIT unions are to discuss the thorny issue of mergers at a meeting in the next week in a move that could herald tie-ups among the country's 414 credit unions, the Irish Independent has learned.
Some experts in the sector said there was an oversupply of 100 credit unions in the State.
If mergers were to happen here at the same rate as they did in the US, there would be one-third fewer credit unions.
The downturn, more stringent regulatory rules, and higher costs have made it difficult for smaller credit unions to survive.
Credit unions with assets of €750,000 or less are said to be struggling to survive in the current economic environment, with governance issues a major challenge, a number of authorities on the sector spoken to by this newspaper said.
A national meeting made up of a regional grouping of credit unions, known a Chapter Officers' meeting, is to be held in Galway on Saturday week.
There are 25 chapters in the State made up of representatives from the boards of individual credit unions.
A spokeswoman from the League of Credit Unions confirmed yesterday that mergers were on the agenda at the meeting of the 25 chapters drawn from around the country.
She added: "Every credit union movement worldwide has been through a rationalisation process. The Irish League of Credit Unions plans to discuss this issue at chapter level to report on worldwide trends and seek members' views."
Head of Cuna Mutual, an American-headquartered mutual society that provides insurance policies to credit unions, Paul Walsh, said it was difficult to see how smaller credit unions would survive at the moment.
Mr Walsh, one of the few in the sector prepared to go on the record, said that credit unions that wanted to grow would elect to come together.
He said one credit union a day was closing in the US, where the sector was now a third of the size it was in the 1970s.
The sector here is under pressure. Recent figures from the League of Credit Unions showed that €900m worth of loans given out by member credit unions have not had repayments made on them for 10 weeks or more.
The movement has also been accused by regulators of failing to put sufficient reserves in place to cope with the downturn.
Each credit union is independently run and owned by its members, which means it is difficult for smaller ones to cope with the growing complexity of regulations and lower levels of member borrowings.
Mr Walsh said: "The writing is on the wall for credit unions, because of the cost of running each individual credit union and the difficulty of getting appropriate directors. A number of them have already come together."
He said the likelihood was that five or six credit unions near each other would come together to form an alliance to share costs such as information systems, marketing and back-office functions. Other smaller credit unions would likely be taken over by large ones in nearby towns, he said.