Central Bank: Stress-tests of credit unions to be complete by end of June

THE Central Bank insists that its review of the ability of Ireland’s 400 credit unions to withstand further bad loan write-offs is ongoing, despite its decision not to award a contract to a third party to carry out the next phase of analysis.

In a recent Irish Examiner article, a Central Bank spokesman said that no decision had been made to publish phase one of the report, adding that no consultant had then been appointed to participate in the second stage of the review.

The Central Bank said the loan book reviews are due to be completed by the end of April 2011 and stress-testing is scheduled for completion by the end of June. It stated yesterday: “The strategic review of the credit union sector is ongoing and the fact that a contract has not been awarded to a third party to carry out work on phase two does not impact on this work. The credit union sector is a very important part of the financial sector and the EU-IMF programme contains specific references to the work on the strategy for the sector.

“These include completion of a comprehensive strategy to enhance the viability of the sector (required by end-April 2011) and the submission of legislation to Dáil Éireann to assist credit unions with a strengthened regulatory framework (required by end-December 2011).”

Financial expert and Irish Examiner columnist Bill Hobbs said he expects the Government to establish a credit union commission to examine the stability of the sector. He said those with savings in credit unions should not panic as these were covered by State guarantee.

“There is emerging evidence of significant losses in the credit union sector,” said Mr Hobbs.