Up to 15 credit unions face bailout in next three months
UP to 15 credit unions may need to be bailed out by a special rescue fund in the next three months, the president of the Irish League of Credit Unions told a private meeting at the weekend, the Irish Independent has learned.
This would soak up around €45m of the bailout fund run by the league.
The league, the largest representative body for credit unions with a €125m bailout fund, operates the Special Protection Scheme fund (SPS) to prop up ailing credit unions.
President of the league Mark Bailey told a regional grouping of credit unions in Co Galway at the weekend that it was likely that between 12 and 15 unions would need support from the SPS in the next three months.
A number of people who attended the meeting, known as a chapters officers' meeting, confirmed to the Irish Independent that Mr Bailey said it was likely more credit unions would need help.
The SPS provides letters of guarantee for credit unions where there are funding problems because their liabilities exceed their assets.
Rising arrears have forced many credit unions to write down the value of loan assets.
A spokeswoman for the league added: "However, there is no doubt that the next 18 months will prove very challenging for the movement generally and we envisage that our unique savings protection fund will be called on to assist some credit unions that require support in these difficult times."
The Central Bank, which regulates credit unions, has pointed out in the past few weeks that some 20 credit unions are on its "watch list".
Recently, this newspaper revealed that Roscrea Credit Union in Co Tipperary was forced to avail of a guarantee of €3m from the league's SPS fund.
And Charleville Credit Union in Cork was given access to €4.3m from the same fund.
The sector here is under pressure. Recent figures from the League of Credit Unions showed that €900m 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.
Meanwhile, in a development that is sure to send shockwaves though the movement in Ireland, another credit union has collapsed in the US.
Washington state-based Credit Union of Spokane has shut down. A one-branch operation with about 3,000 members, it had $11.8m (€8.5m) in assets as of September 30, compared with $12.2m at the end of June.
The state agency approached 18 other credit unions in the state and couldn't find a merger partner, the agency's top credit union regulator Linda Jekel told the 'Seattle Times'.
It is the 17th federally insured credit union to be closed this year and the first credit union in Washington state closed since 1995.