Monday 22 January 2018

'Super' credit unions set to emerge from new tie-ups

Anne-Marie McKiernan, Central Bank regulator to Credit Unions
Anne-Marie McKiernan, Central Bank regulator to Credit Unions
Charlie Weston

Charlie Weston

A STRING of mergers is set to create three "super" credit unions, as the pace of restructuring in the sector picks up.

It comes as regulator Anne Marie McKiernan has increased pressure on the movement to speed up the rate of tie-ups.

The income of the sector is coming under huge pressure from low demand for loans, and falling interest rates, putting pressure on for consolidation.

Mergers are a way of cutting costs.

Much of the assets of the sector are tied up in low-interest paying bank accounts and low-yield Government bonds.

There are 374 credit unions in the State with each of these individually operated and owned by its members.

Now it has emerged that more larger groupings are being created.

One of the largest credit unions, the Health Services Staffs Credit Union, has taken over three smaller ones.

It now has 31,000 members and assets of €190m, after joining forces with St Gabriel's, which was set up for postal and communications workers.

Also folded into the Health Service CU, was the CIE Staff Credit Union in Cork, and the Castle Credit Union, which was set up for Unilever Ireland employees.

Law Library, Texaco Employees and James's Street have previously been folded into Health Services.

And the Progressive Credit Union in north County Dublin is set to join forces with Victory in the Glasnevin and Ballymun area of Dublin.

Progressive is the result of the coming together of Balbriggan, Skerries and Donabate.

Last year Progressive took over Howth/Sutton following a High Court-approved transfer.

If the Victory takeover goes through it will have a membership of 40,000 and assets of €90m.

The manager of Progressive, Sean Staunton, said: "This agreement is a further step in a series of strategic alliances between credit unions in North Dublin."

He added that the alliances are "aimed at building a robust and vibrant credit union business that will attract new members and extend the benefits we already provide to our members across the Dublin region".

And there are ongoing efforts for a tie-up between Drogheda, East Meath and Trim credit unions to create an entity with assets of close to €200m.

However, issues around staffing are understood to be holding up the talks on a merger agreement.

Last December the High Court approved the forced takeover of Killorglin Credit Union by its larger neighbour Tralee.

The tie-up has created one of the largest credit unions in the country with 41,000 members and €170m in assets.

One of the largest mergers has been the coming together of Coolock-Artane with Swords and District in north Dublin.

The combined entity is called Member First, and has 44,000 members and assets of €150m. In south Dublin, Dalkey joined with Shankill-Ballybrack and Sallynoggin-Glenageary to form a €70m unit.

Credit unions have also joined forces in Tipperary and in Clare.

Some 30 credit unions have merged to form 12 new entities under the guidance of the credit union restructuring board, ReBo. Another 120 are considering merging.

There are less than 30 credit unions with assets over €100m, with a tiny number that have assets in the €200m range.

Credit unions with low reserves and elevated levels of arrears on loans they made during the boom are being encouraged to allow themselves be taken over by larger entities.

Ms McKiernan said recently that restructuring is required to develop a strong, viable sector.

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