Restructuring could see as many as 100 credit unions merged by 2016

Up to 100 credit unions may seek to merge to secure their future over the next four years, according to estimates.

The country’s credit union sector is set to undergo major restructuring by the end of 2016, with a strengthening of branches — through mergers, consolidations, and significantly expanded product offerings — recommended by the Commission on Credit Unions.

While the commission has declined to comment on how many existing credit unions will be affected, it did say amalgamation and consolidation is on the cards.

Independent estimates, however, have suggested that 100 unions could merge.

Reacting to the publication of the commission’s report — which said that the credit union brand is not being marketed to its full potential and runs the risk of becoming outdated — Finance Minister Michael Noonan said its recommendations “will influence the shape of the credit union sector for many years to come” and will mark “a fundamental turning point” in the development of the credit union movement in Ireland.

The commission has also recommended a tiered regulatory approach for the sector — proportionate to unions’ asset values — something which has pleased industry representatives.

Both The Credit Union Development Association and the main umbrella body, the Irish League of Credit Unions welcomed yesterday’s report. The ILCU chief, Kieron Brennan, called it a “big win” for the movement, meaning that the sector “has won the right to decide its own future”.

The commission has also called for the Central Bank to establish a stabilisation fund for viable but under-capitalised credit unions, but has declined to expand upon its reckoning that the overall restructuring of the sector could call for “significant funding”.

For its part, the Central Bank said it supports the commission’s findings and recommendations.

It said the introduction of a strengthened regulatory framework — including fitness, probity, and governance standards — is key to the sector’s development.

The bank added that a stronger credit union network “can play a key role” in the Irish financial services sector.