Credit union consolidation ‘likely’

THE Irish League of Credit Unions (ILCU) has said that further consolidation among local credit unions is likely in the coming year, but believes that the movement’s footprint across the country won’t suffer as a result.

Speaking yesterday, ILCU chief executive Kieron Brennan said that a number of member unions had approached the league looking at sharing services with neighbouring unions.

He added that figures published earlier this week — showing a 13% increase, this year to date, in credit unions chasing unpaid loans through the courts — shouldn’t come as a major surprise given the impact of the recession on customers.

Figures for the 12 months up to the end of June, published today, show that ILCU credit unions (the body covers 397 in the Republic and 102 in the North) have combined assets of €13.6 billion and a loan book value of €5.7bn.

Those two figures are down by 1.8% and 8.1%, on a year-on-year basis. The ILCU financial year runs up to the end of September, so the full picture — regarding how many unions made a surplus or delivered a dividend, in the last 12 months, won’t be known until early 2012, when the league’s annual report is published.

However, the organisation expects a marginal increase on the 25% of unions who failed to pay a dividend in 2010, but added the majority are still generating a surplus and paying a dividend.

In the year to the end of June, credit union customer numbers increased to 3.05 million, up 50,000.

Lending levels, however, fell from €6.3bn to €5.7bn. Provisions for under-performing loans, however, are up from €512 million to €697m in the past year.

On that note, Mr Brennan criticised lending restrictions being placed on its members, saying they are “a concern” and could undermine the viability and performance of many credit unions around the country.

Currently, about 70% — or 300 — credit unions aligned to the ILCU are restricted by the Registrar of Credit Unions, in their lending practices and the ILCU is seeking clarity of policy with the registrar.

He said that the credit union movement is still in robust health, given the economic climate, but will — following pending regulatory and legislative changes — change in the coming years.

He added the new Commission on Credit Unions is set to deliver its first interim set of proposals next week.

Mr Brennan said that the ILCU’s working relationship with financial regulator, Matthew Elderfield, remains “routine and businesslike”.