The Central Bank has expressed concern over the pace of recovery in the credit union sector, despite the recent restructuring of the industry.
Addressing the annual conference of industry representative body, CUDA, over the weekend, the Central Bank’s registrar of credit unions Anne Marie McKiernan said her department will continue to support restructuring within the sector even after the conclusion of the credit union restructuring board’s (ReBo) mandate at the end of March.
ReBo’s last progress report, issued in October, showed that just over half of the credit unions in Ireland have engaged with the board since its inception in 2012.
The restructuring of the sector could see the total number of unions fall from 425 in 2006 to 300 by the end of this year.
“We are now seeing more mid-sized credit unions assessing merger opportunities and while some proposed link-ups present special challenges, it is clear that restructuring has become widely embraced by credit unions as a strategic opportunity,” Ms McKiernan said at the weekend.
However, she also voiced concern over the slow pace seen to-date in the aftermath of restructuring and mergers.
“Has the restructuring undertaken, to date, delivered the cost savings and efficiencies which put the sector in the best position to deal with its structural challenges?
“Clearly, many mergers are still in the bedding-in period, but nonetheless we would have concerns aat the limited benefits becoming visible – as of yet – regarding cost efficiencies, service development and membership growth.”
Regarding the financial position of credit unions, Ms McKiernan said: “It is fair to say that the picture is one of improvement in some areas and continuing concerns in others.”
She urged all those involved in restructuring to “keep focused on using the process to help their credit unions to drive for financial and operational efficiencies and to use those efficiencies, and the broader capabilities of merged entities, to continue to attract younger active members and to facilitate business model development.”
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