Saturday 18 November 2017

Mega merger on the cards as top Credit Unions in talks to join forces

'Rising savings and falling lending is a problem for credit unions as they need higher reserves'. Stock Image
'Rising savings and falling lending is a problem for credit unions as they need higher reserves'. Stock Image
Charlie Weston

Charlie Weston

Two of the largest credit unions in the Munster region are in talks that could lead to a mega merger.

Clonmel Credit Union may end up taking over Cork's Charleville, if the discussions reach a successful conclusion.

The move could see up to €4m pumped into Charleville from the Irish League of Credit Union's support fund in a bid to bolster its reserves.

Separately, discussions are ongoing between the Civil Service Credit Union and the Irish National Teachers' Organisation's (INTO) lender Comhar Linn CU on a tie-up.

This would be a merger of equals if it happens, and would create one of the largest credit unions in the State.

Both are profitable and well reserved.

In Cork, Charleville has been hit by a big fall in the value of its offices in the town, a large former bank branch building.

No annual general meeting has been held since August 2012, according to the Irish League of Credit Unions.

It has 12,100 members and assets of €43m.

Sources indicate that it will need up to €4m from the league's Savings Protection Fund to replenish its reserves ahead of a merger. Charleville has in the past aggressively gone after people who failed to repay loans. In 2013, it secured €1m in court judgments against 16 individuals, the highest of any credit union that year.

The lender has been hit by high levels of bad debt despite operating in the wealthy Golden Vale hinterland.

Tipperary's Clonmel lender is conducting due diligence ahead of a merger, with the Central Bank closely involved in monitoring developments.

The tie-up is expected to be completed in six to seven weeks, it is understood.

The combined credit union would have assets of €218m, and a total membership of close to 40,000.

Although they are a considerable distance apart from each other, Clonmel was chosen to take over the Charleville lender due to its financial strength.

Savings in all credit unions are protected up to €100,000 per member.

Meanwhile, merger talks are ongoing between the Civil Service and the INTO Comhar Linn credit unions.

A combination of the two public service lenders would have assets of €355m, making it one of the largest in the State.

The tie-up would produce a body with almost 40,000 members.

The teacher credit union, set up by the Irish National Teachers' Organisation, had a surplus of €2.9m last year, according to manager Michael McHugh.

Total savings rose by €10m last year.

Rising savings and falling lending levels are a problem for credit unions, as they have to make higher reserves for the savings just as lending income is down.

Manager of Civil Service Credit Union Ursula Nolan said her lender had a surplus of €3.9m last year.

Talks are continuing on merger plans for credit unions in RTÉ and the ESB. The combination would create a "mini bank".

St Patrick's Credit Union is in early-stage talks to take over the RTÉ lender in a move that would create the largest credit union in the State.

If the merger goes ahead, the enlarged body would end up being like a mini bank, with assets of close to €420m.

Fast-expanding St Patrick's started out as the ESB Credit Union.

In the last year, it has taken over five other local lenders in the inner Dublin area, including the one for staff of Independent Newspapers.

Irish Independent

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