Credit union overhaul could cost €2bn

The restructuring of the country’s credit union movement could cost more than €2bn; rather than the €500m currently being put aside to cover the cost of change.

According to one consultant, an overhaul of the movement could see the number of individual unions more than halve over the next five years.

Speaking to the Irish Examiner yesterday, David Jackman of global consultancy RGP — which has worked closely with a number of Irish-based credit unions in recent years — estimated that the overhaul of the sector, on the back of the recommendations put forward in the Credit Union Bill 2012, could result in the number of individual unions in Ireland dwindling from about 600 to 150-200 over the next two to five years.

Additionally, Mr Jackman said the proposed €500m restructuring board fund — which forms part of the bill — may not be enough in a worst-case scenario. If the restructuring board fund is used solely to facilitate mergers and alliances between certain credit unions, the €500m may suffice, he said.

However, if it needs to be stretched to bail out underperforming and financially constrained unions, then it won’t be and may need to be boosted by four or five times that amount, he estimated.

Mr Jackman was speaking in the wake of Friday’s comments by EU commissioner, Olli Rehn, that Brussels is closely monitoring Ireland’s credit union sector, for fear of it having a negative impact on the country’s budget deficit over the next few years.

Mr Jackman said such monitoring should be welcomed, as it is “dangerous to rely solely on regulation” to maintain a sector.

However, Mr Jackman added that we are getting a “mixed picture” of the credit union sector, saying that it is not in as bad shape as sometimes claimed.

He doesn’t foresee a “full-scale system collapse” resulting in the need of a multi-billion euro bail out, but still maintains that this is a key and “crunch” year for the sector.

“It is too soon to panic and it wouldn’t be right to do so,” Mr Jackman said. But, he added that the movement must become more proactive and more professional, this year, in order to take a grip on its own destiny.

“This is the year where things will either slide by the sector or when it will start to take control, either individually or collectively,” he added.

© Irish Examiner Ltd. All rights reserved

More in this Section

Euro at seven month low against the dollar ahead of ECB meeting

Intel R&D gets €5.9m in tax credits which is more that it's pre-tax profits

European Commission raises concerns over Irish debt and rising rents that could scupper economic recovery

Enterprise Ireland third most prolific seed investor in world according to Pitchbook

You might also like

Breaking Stories

GAME has created a Black Friday simulator for gamers

Grinches everywhere can now enjoy a festive-free newsfeed

Black Friday: The best tech deals you might not have spotted

Brexit 'would be disaster for Ireland': Sean Kelly


Eat your way to an illness free winter

Butt out when Dad’s in charge and let him do it his way

5 tips for a seamless desk-to-dance floor transformation this festive season

More From The Irish Examiner