Credit unions create company to boost lending

Move will allow credit unions to grow their individual volumes of personal, mortgage and SME lending by using their combined balance sheet strength and ability to access new sources of longer-term funding

Programme for government supports expanding the role of credit unions in Ireland, in particular to increase the capacity for home and business-related lending. Picture: Gerard McCarthy 

Five credit unions leading the project to create a Corporate Credit Union (CCU) have established a new asset and liability management company, which in time will evolve into a centralised treasury function.

Twenty six credit unions with combined assets of almost €9bn, more than 40% of the sector’s assets, have committed to join this new company, a Credit Union Services Organisation that is intended to evolve into a corporate credit union. Other credit unions will be invited to join the project in the coming months.

The concept of a corporate credit union is provided for in the Credit Union Amendment Act 2023. It is expected new regulations will be introduced in due course by the Central Bank, which will define the regulatory requirements of a CCU.

A CCU is essentially a credit union for credit unions, creating a centralised treasury function for the sector. This will transform the ability of credit unions to grow their individual volumes of personal, mortgage and SME lending by using their combined balance sheet strength and ability to access new sources of longer-term funding. The establishment of a CCU will be subject to full regulatory approval.

In the update, the five credit unions have announced the new company, trading as CCU CUSO. This has been established as a precursor to a corporate credit union. The new company is registered as a CLG operating on a not-for-profit basis with participating credit unions as owners.

The company's core activities will be the development and rollout of a standardised framework to all participating credit unions, developing alternative sources and methods of funding for credit unions, and leading industry thinking, in conjunction with the Irish League of Credit Unions and the Credit Union Development Association.

This company has held a recent EGM, and a chair and board of directors has been appointed which features experienced senior figures from financial services and other sectors in Ireland. This is the first predominantly independent board to be established in the credit union sector in Ireland.

The programme for government supports expanding the role of credit unions in Ireland, in particular to increase the capacity for home and business-related lending. 

In 2025, the Central Bank of Ireland confirmed credit unions would be allowed to increase the level of mortgage lending they do as a percentage of their total assets, up to 30%.To reach that volume, credit unions will require more sophisticated asset and liability management resources, hence the interest in a centralised treasury function.