Saturday 16 December 2017

Second credit union fears takeover by regulator over insolvency claims

Charlie Weston Personal Finance Editor

MEMBERS of a major credit union fear it could be next to be taken over by the Central Bank.

Cavan Credit Union has not been allowed to hold an annual general meeting for two years and allegations have been made in the High Court that it is insolvent.

Earlier this month, the Central Bank took over Newbridge Credit Union amid fears that at least another dozen will be swooped on by regulators.

Now a number of members of the Cavan lending co-operative have expressed concern to the Irish Independent about their credit union.

One person said people in the area have been continually told that the AGM was due to be held soon.

But two years later Central Bank regulators have still not sanctioned the publishing of annual accounts for 2010 or last year, or the election of officers at an AGM. No dividend has been paid for two years.

This has prompted concerns in the area about the financial health of the credit union.

The High Court was told in October by John McCourt, who took action to block his dismissal as manager, that the credit union was technically insolvent when he took over.

He told the court his employment was to be terminated last September after he allegedly failed to turn the credit union around.

The credit union -- which has offices in Belturbet, Ballinagh and Killeshandra -- has, in common with many other credit unions, been hit by rising loan arrears.

Figures from business information service VisionNet show that last year Cavan took 20 judgments totalling €382,629 against members for failing to repay loans. The average judgment was €19,131.

A spokesman for the Central Bank had no comment on Cavan Credit Union. The Irish League of Credit Unions, of which the Cavan lender is a member, blamed pressure from new regulatory rules for the delay in publishing accounts.

"Cavan Credit Union regrets if the delay on the AGM is causing concerns to members, however, there are a number of new regulations now in place in relation to credit unions which the credit union is dealing with at the moment.

"A decision on the payment of a dividend at Cavan Credit Union will not be made until the year-end accounts have been finalised," the league said.

Expectations are that the Central Bank will have to take control of several more credit unions this year as huge numbers of borrowers are unable to repay their loans.

Senior financial sources are convinced that a number of the lenders will not survive without intervention.

The predicted takeovers will come in the wake of the regulators' swoop on one of the largest co-operative lenders in the State. Luke Charleton, a finance expert from Ernst & Young, has been put in to run Newbridge Credit Union after the High Court granted a request from Central Bank regulators for the appointment of a special manager to the lender.

Newbridge is the third largest community-based credit union of the 408 in the State, with assets of €190m.

It was the first time the regulators used new legislation to take control of a credit union.

Irish Independent

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