Body to help credit unions releases just €3.5m

The organisation tasked with facilitating the restructuring of the country’s credit unions, including through providing financial support, was first able to forward monies to credit unions just a fortnight ago, 23 months after being set up.

The Credit Union Restructuring Board (ReBo) which was established as a legal entity from January 1, 2013, has drawn down just €3.5m, or less than 1.5%, of a €250m government fund — more than a third of which has been used for operational costs.

The Credit Union Fund, created under 2012 legislation, can be accessed by ReBo to provide stabilisation support to a credit union which holds an inadequate regulatory reserve; to fund operational costs; or to help a credit union’s voluntary restructuring efforts.

It emerged before a hearing of the Public Accounts Committee (PAC) yesterday that ReBo could not provide monies from that fund up until November 28, however, and that a large amount of the fund will not be used.

Under questioning from Fine Gael TD John Perry, ReBo interim chief executive, John Doyle brought the issue to light while defending the organisation’s performance.

“We’re entirely bound by a specific piece of legislation in what we can and what we can’t do...

“In answer to [Deputy Perry’s] question, I would like to make what is a very important point as well [which] is that the terms and conditions that attach to the fund were only agreed two weeks ago so we would not have been, up until two weeks ago, in a position to provide monies to a credit union from that fund,” said Mr Doyle.

Mr Perry outlined his dissatisfaction that the point had not previously been made public knowledge and was not included in ReBo’s opening remarks to the PAC yesterday.

Mr Doyle added that ReBo was dealing with 150 credit unions, representing 50% of the assets of the sector, which ReBo hopes to restructure using funds from within their existing capital structures without availing of the fund — a scenario he described as “a very positive thing” as it would have no recourse on exchequer funds.

A spokesperson for the Department of Finance said that the scheme will provide financial assistance to restructuring credit unions that are not in a position to finance the process themselves through excess capital within participating credit unions, and added that as the support constituted state aid, the scheme had to be approved by the European Commission prior to its introduction.

The department also said that it was not aware of any restructuring stabilisations that have been held up as a result.

Mr Doyle said: “What we’ve come across thus far — and we have interacted with every credit union in the country that will meet with us and in the 150 proposals that are in front of us — that credit unions are solving these problems themselves in 90% or 95% of cases; these issues are being addressed from within the existing capital structures of the credit unions.

“You [also] have the issue of [the fund’s] relative unattractiveness to credit unions insofar as taking on debt at 5%, 6% or 7% in the current environment is difficult for credit unions,” Mr Doyle said.

To date, ReBo has facilitated eight restructurings involving 20 credit unions.