Ireland's Central Bank sees further credit union weaknesses

The Central Bank has said it continues to see weaknesses across a number of credit unions, particularly in the areas of governance and credit underwriting.

It said the trend is particularly concerning at a time when many credit unions are looking to change their business models to allow for increased home and SME lending.

“Given existing commercial challenges facing credit unions and additional challenges presented by Covid-19 and Brexit, it is critical that credit unions maintain strong core prudential foundations,” said the Central Bank’s registrar for Credit Unions Patrick Casey.

“We acknowledge that some credit unions have made progress towards addressing prudential concerns,” he said. 

However, it is a concern that we continue to identify weaknesses in core areas including credit underwriting – clearly there is still more work to be done.

“At a time when so much attention centres on lending capacity, it is essential that credit unions address the fundamental weaknesses identified in these areas.

“Lending regulation changes introduced in early 2020 provide additional lending capacity. To be sustainable, credit unions must demonstrate that they have the competence and capability to avail of this additional lending capacity,” Mr Casey said.