Credit unions must fulfil their potential
Yesterday's discussions between the Central Bank and the Irish League of Credit Unions on a new regulatory regime for the state's 414 credit unions marked a welcome step forward. With both sides apparently committed to reaching agreement, the credit unions now have the opportunity to live up to their full potential.
The credit union movement survived the financial crisis much better than most of the banks. However, it did not emerge unscathed from the bust. Far from it. Last year the Central Bank warned that up to 20 credit unions, almost 5pc of the total, faced "serious solvency issues". It also stated that credit unions were not providing adequately for bad debts on their combined €6.8bn loan book.
At the end of June 2010, almost 15pc of all credit union loans were in arrears. While the Irish League of Credit Unions points out that a large proportion of these arrears are secured against the savings members must have with their credit union before they can borrow, the arrears level was up from 9.4pc just 12 months previously.