Thursday 5 December 2019

Top credit union limits amount that can be saved and won't pay dividend

Cap on saving levels: Progressive credit union CEO Sean Staunton. Picture: Maxwells
Cap on saving levels: Progressive credit union CEO Sean Staunton. Picture: Maxwells
Charlie Weston

Charlie Weston

One of the State's largest credit unions has put a cap on the amount of money members can save with it and also decided it will not pay any interest to its savers.

Progressive, which has 56,000 members in North Dublin, has limited member savings to €30,000.

People with more than this in savings were asked to withdraw money.

It is just one of several credit unions that have decided to limit savings. Credit unions are awash with cash but are struggling to loan the spare funds out to earn a surplus.

Please log in or register with Independent.ie for free access to this article.

Log In

Stock picture
Stock picture

Banks charge credit unions to deposit their cash, so-called negative interest rates. Credit unions also blame Central Bank rules for cutting the amount of savings they can accept from members.

This is because credit unions are required to maintain 10pc of their assets as a minimum regulatory reserve.

Progressive CU has also this year decided not to pay a dividend, or interest, to its members who have money with it.

Last year a dividend of 0.1pc was declared for shareholders.

The credit union said it would be contradictory to be paying a dividend while also restricting saving levels.

The decision comes after the credit union reported that its profits, or surplus, fell by 58pc to €1.1m, according to the annual report for 2019.

It had some one-off gains from the sale of property in the previous year, while its surplus for 2019 has also been hit by the low interest being paid on its investments.

Sean Staunton, CEO of Progressive, said the relaxing by the Central Bank of mortgage lending for credit unions could see his credit union issuing between €15m and €20m in home loans in the short term.

Irish Independent

Also in Business