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Credit unions may lose €12m

THE Government's move to liquidate the former Anglo Irish Bank could see up to a dozen credit unions lose as much as €1m each.

There were fears today that last week's shock decision to wind down the bank will plunge a raft of Irish credit unions into a financial crisis.

A number of branches invested €10m-€12m in a complex investment scheme run by the toxic bank back in 2005.

These funds are now entangled in the liquidation of the Irish Banking Resolution Corporation (IBRC) which was announced last week as part of the promissory notes deal.

As many as 12 credit unions are facing losses of €1m each – with fears that one branch will require a mini bailout in order to stay afloat.

However the problems surrounding the investment funds pose no risk to customers' deposits, which are safe as part of the Government guarantee.

Credit unions in Mayo and Limerick – the constituencies of Enda Kenny and Michael Noonan – are understood to be facing the largest financial hit.

The Department of Finance has said that the credit union money was invested in an "equity-linked bond" with no guarantee that they would get their money back.