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Credit Union forced to transfer accounts over stability fears

THE business of a north Dublin credit union is to be transferred immediately to another following an order of the High Court.

Court President Mr Justice Nicholas Kearns yesterday directed the transfer of the business of Howth Sutton Credit Union (HSCU) to the Progressive Credit Union (PCU), with registered offices in Balbriggan, Co Dublin.

The Central Bank sought the order arising from its serious concerns about the financial stability of the credit union which, it believed, could not be adequately addressed unless such a transfer was made, the court heard.

The Central Bank stressed that the move will not affect the members, creditors, employees or data of HSCU for whom it will be "business as usual" under the new arrangement.

HSCU was consenting to the order, the court heard.

Paul Gallagher SC, for the Central Bank, said there would be "very serious" consequences if the order was not made and it was "absolutely critical" it take immediate effect.

It was considered that 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 HSCU were transferred to PCU for a "financial incentive" in an undisclosed sum representing the aggregate market value of the assets over liabilities.

A competitive process had been carried out to assess that market value, it was also stated.

While other resolution options were considered, they were "not appropriate", the Central Bank said.

The application arose from the issuing since 2009 of directions to HCSU by the regulator of credit unions, including directions requiring it to maintain a regulatory reserve of not less than 10pc.


All credit unions were required to meet the Regulatory Reserve Ratio by September 2013.

While the possibility of a voluntary transfer under the Credit Union Act of the credit union's engagements had been explored over the past three years, a voluntary transfer could not be achieved for a number of reasons, it was stated.

The Credit Union Restructuring Board had told the regulator of credit unions on January 31 that final discussions with HSCU and the Irish League of Credit Unions on potential restructuring options had not resulted in any "reasonable restructuring case" for the board to recommend.

Mr Justice Kearns said he was satisfied to make the order that was sought under the provisions of the Central Bank and Credit Institutions Resolution Act 2011.