Collapse in value of €3.5m office forces Howth credit union to merge with neighbour
THE collapse in the value of plush offices built during the property boom has been blamed for the forced merger of a credit union in affluent Howth.
The savings accounts and loans of Howth Sutton Credit Union have been transferred to a neighbouring credit union after its reserves were wiped out. However, the Howth office will remain open and savings are all safe.
Offices on Howth Main Street that cost €3.5m to build in 2008 have had their value written down heavily in the books of the credit union, prompting its reserves to collapse.
Loan arrears were not behind the decision of regulators to seek the merger. There are close to 3,000 members of the credit union in Howth and Sutton, with total loans of €2.4m, and savings of €6.7m, documents presented to the High Court show.
Howth overlooks Dublin Bay and some of its residents are among the wealthiest in the country.
Yesterday the High Court directed that the business of the North County Dublin Credit Union be transferred into Progressive Credit Union, which has a head office in Balbriggan.
Progressive was only created before Christmas, when credit unions in Balbriggan, Skerries and Donabate agreed to a voluntary merger.
Court president Mr Justice Nicholas Kearns yesterday directed the transfer of the business of Howth Sutton to the Progressive. The Howth offices will remain open and savings are safe, the court was told.
The High Court had heard that the Central Bank sought the order arising from its serious concerns about the financial stability of the credit union.
It believed these could not be adequately addressed unless such a transfer was made, the court was told.
The Central Bank stressed the move would not affect members, creditors, employees or data of Howth Sutton Credit Union for whom it would be "business as usual" under the new arrangement. Directors of Howth Sutton Credit Union consented to the order, the court heard.
Paul Gallagher, for the Central Bank, said it wanted the order arising from its serious concerns about the financial stability of the credit union which, it believed, could not be adequately addressed unless the order was made.
There would be "very serious" consequences if the order was not made and it was "absolutely critical" it take immediate effect, he said.
It was considered a winding-up of the credit union was not in the interests of its members or in the public interest, counsel added.
The unquantifiable costs of a liquidation included the impact on the credit union sector and on confidence in financial institutions generally, he said.
Under the order, all the assets and liabilities of Howth Sutton were transferred to Progressive for a "financial incentive" in an undisclosed sum representing the aggregate market value of the assets over liabilities.
A previous attempt to merge Howth Sutton with nearby Malahide Credit Union was rejected by the Central Bank, it is understood.