Credit unions receiving cash support

A NUMBER of credit unions in severe financial difficulty have broken deadlines to file accounts with the Financial Regulator and are receiving cash support from the Irish League of Credit Unions’ €120 million Savings Protection Scheme.

As many as 10 credit unions have failed to hold annual general meetings for 2009 because they have failed to get their accounts signed off by the Financial Regulator. By law all credit unions were required to submit their 2009 annual returns to the Regulator by March 31. The unions involved have not paid dividends to tens of thousands of credit union members.

The reasons for the postponing of an AGM can include issues in relation to the level of reserves retained, bad debt provisions, governance and other financial matters, and in such cases the Financial Regulator seeks “actions” to address the outstanding matters.

A spokesperson for the regulator said: “We are working closely with those small number of credit unions that have not yet held their 2009 AGM with a view to ensuring that all outstanding matters are resolved to the satisfaction of the Financial Regulator as soon as possible so that the 2009 AGMs can be held. “In such cases credit unions are encouraged to respond to member queries on the outstanding AGM by advising that they are working with the Financial Regulator with a view to addressing matters, taking remedial action where appropriate, and holding the AGM as soon as possible. We expect that all credit unions will hold AGMs in the coming months.”

It is understood that loan loss provisions are triggering losses and solvency issues at a number of credit unions but The Regulator has refused to identify the credit unions in difficulties saying they are “not permitted to disclose any information relating to specific credit unions”.

The Irish League of Credit Unions (ILCU) confirmed it is working with “a small number” of credit union boards.

“This process is entirely self-financed by credit unions through our own Savings Protection Scheme and unlike recent occurrences in the financial services sector in Ireland does not require any bailout from taxpayers’ money. Credit unions who are involved with this process are working with the Financial Regulator to ensure that they continue successfully trading within the local community. This process in no way affects the day-to-day operations at the credit union or the members in anyway,” an ILCU spokeswoman said.

The ILCU said the SPS may offer funds to affiliated credit unions to “allow them trade out of the difficulty they may experience”.

The ILCU said it is not in a position to name the credit unions that benefit from the fund. “Each credit union’s annual accounts will disclose any funding received, including SPS assistance,” it added.