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

Email Updates

Receive our lunchtime briefing straight to your inbox

More in this Section

Growth in new homes build may have halted

Mortgage bill ‘makes matters worse’

European Union sues over car testing failures

Mario Draghi braces for 2017 polls


Breaking Stories

Super Mario Run requires an internet connection to play

CSO figures show Ireland is set to be Europe's fastest-growing economy in 2016

Amazon registers Amazon Go trademark in the UK

Nikkei hits record high after Wall St boost

Lifestyle

Fair City: Behind the scenes at Carrigstown

Ask Audrey has been sorting out Cork people for years

Well-known Irish people share their favourite books from their childhoods

Watch Michelle Darmody make the perfect Christmas cocktail

More From The Irish Examiner