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Credit unions to get €1bn boost

THE Government will pump up to €1bn into credit unions around the country.

The move is being made to strengthen the balance sheets and boost the reserves of credit unions that have run into difficulties.

Although the majority of credit unions are healthy, Minister for Finance Michael Noonan said that others were "on the brink of falling down a hole".

"I seriously intend sorting out the credit unions and some of them we'll have to do immediately, but we won't do it in one big bang," the minister has told the Seanad.

Around 20 of the 79 at-risk credit unions have experience serious financial difficulties. These have sought financial aid from a fund set up by the Irish League of Credit Unions.

Almost €1bn worth of loans at the State's 400 credit unions are in arrears for 10 weeks or more. This represents gross arrears of 18pc of the €5.2bn loan book in the Republic.

Mr Noonan said that if the movement had been one large bank with individual branches, it would have no problems because the good ones would balance the bad ones.

"But individual credit unions have problems that are coming down the road quickly," he said.

A commission set up earlier this year to examine the credit union sector is due to deliver an interim report next Tuesday.

But Mr Noonan said that matters had been "overtaken by events" and the Central Bank had requested that it urgently be given extra powers to deal with credit unions "that are on the brink".