Tuesday 20 March 2018

One-third of credit unions considering mergers

The Central Bank on Dame Street
The Central Bank on Dame Street

MORE than one-third of the country's credit unions are considering merging – in a revolution that will help to bolster the movement and secure the savings of its 2.8 million members.

Some 125 credit unions have contacted the new state body set up to manage voluntary mergers. This represents around one in three of the 392 member-owned lenders.

And 40 credit unions are already lined up to come together in a move that will boost the services they will be able to offer to their members.

It comes as the sector struggles with the fallout from the economic crisis, with the Central Bank monitoring 100 credit unions – or one in four of the community lenders – as it is concerned about arrears, bad debts and lending practices.

The mass mergers are not expected to lead to the closure of any credit union offices, any job losses or the loss of the one-member-one-vote system, experts said.

Currently, there are 392 credit unions, and each is owned and run separately.

This means they each have their own board of directors, manager, supervisory committee, separate IT system and other costs.

The head of the state body set up to manage voluntary tie-ups said the planned merger of 40 different credit unions would mean there would now be 18 separately owned credit unions.

This would make them stronger but there would be no loss of services for members, said Donal Coghlan of the Credit Union Restructuring Board (Rebo).

The Government has set aside €250m to cover the legal, accountancy and other costs for credit unions that are merging. This is in addition to the €250m fund run by the Central Bank to boost credit unions that are in trouble.

Mr Coghlan revealed that the first merger of the new regime is set to be completed in weeks with the coming together of Balbriggan, Skerries and Donabate in north Co Dublin.

The merged body will be renamed Progressive Credit Union and will have assets of €70m. Offices in the three towns will remain open but instead of three corporate entities there will just be one.

This is expected to lead to major savings as there will be just one board instead of three, and the new body will have one IT system instead of three.

Mr Coghlan said the move would mean that electronic payments that are already offered by Balbriggan will now be available to the members of the combined unit.

There were seven mergers last year, but from now on there is expected to be a flurry of tie-ups in the sector.

Rebo is to conduct 12 meetings with credit unions in the coming weeks to promote the idea of them bulking up.

Mr Coghlan said: "There have been expressions of interest in merging from 125 credit unions. Some 40 are actively engaged in mergers in some manner."

He said the credit unions were joining up with one other near them, and sometimes two.

Those discussing coming together ranged from large industrial credit unions and small parish-type ones all across the country, he said.

He stressed: "These are mergers. There will be no loss of service. Members will still have the same branch office, the same vote, and will get a better service from a larger credit union."

New regulatory rules and being restricted from offering other financial services besides loans have hit the income of credit unions hard.


Since October, credit unions have to comply with a raft of new Central Bank regulations.

These include new fitness and probity rules for directors, the appointment of compliance officers, risk managers and internal auditors, and tighter lending rules.

Last month, 147 credit unions were given a licence by the Central Bank to operate electronic payments.

This will allow members to have their wages paid into their credit union and make payments electronically out of their credit union accounts.

It is the first move in what is set to see the locally owned lenders offering full banking services, such as debit cards.

Charlie Weston  Personal Finance Editor

Irish Independent

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