Monday 20 November 2017

Central Bank limits 'hitting credit union recovery bid'

(Stock picture)
(Stock picture)

Charlie Weston Personal Finance Editor

RESTRICTIONS placed on Charleville Credit Union by the Central Bank are making it impossible for it to trade its way out of its financial difficulties, its chairman claims.

The troubled Cork lender's chairman, Pat Savage, said in a letter to members the clampdown by regulators risked making its business model unsustainable.

Mr Savage told members the restrictions on the amount that can be loaned out have been in place for seven years.

He said the lending limits were making it very hard for the lender to trade its way out of its financial difficulties.

Plans to rescue the credit union by merging it with the stronger Clonmel lender in Co Tipperary were abandoned last month. This means the future of Charleville is now uncertain.

Charleville has received around €8m in rescue funds from the Irish League of Credit Unions, but is understood to need another €5m. The letter does not specify these figures, but does state the league's Savings Protection Fund is available to Charleville to help it trade out of its difficulties.

"Despite these supports and the improvements made by your board and management team, the full extent of the Central Bank restrictions remain in place and will soon make our business model unsustainable," the letter states. "As you are aware, Charleville Credit Union has had its challenges."

The credit union has had to dramatically reduce the value of its office in the town since the property collapse, something which has hit its balance sheet hard. It has €43m in assets, and 12,000 members.

Mr Savage said the latest version of the Central Bank lending restriction limited loans per member to €15,000.

He denied the credit union was laying all the blame for its difficulties at the feet of the Central Bank, in reply to a series of questioned emailed to him.

Mr Savage insisted there were no governance issues at the credit union, and said a new volunteer board was in place and was doing its best to strengthen the lender.

Last month, the Central Bank and the Irish League of Credit Unions had to abandon a deal that would have seen the Cork lender taken over by Clonmel.

Indo Business

Promoted Links

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Also in Business