Credit Union sector has €2.1bn in loan capacity not being used

David Malone, CEO, Irish League of Credit Unions (left) with Gabriel Makhlouf, Governor, Central Bank of Ireland, Jennifer Carroll MacNeill, Minister of State at the Department of Finance and Martin Busch, President, Irish League of Credit Unions. Picture: Robbie Reynolds

Large credit unions in Ireland have €2.1bn of funds they could lend out to homes and businesses if they took advantage of increased lending limits available to them, the Governor of the Central Bank has said.

Gabriel Makhlouf said it was regrettable that there has not been a significant take up of the increased limits and said that at 30%, the loan-to-asset ratio in the credit union sector remains close to historically low levels. Of the 67 larger credit unions in the country, just 12 have applied for the increased lending limits. Of these 12, nine have already been approved, the Governor said.

"The credit union sector has significant funds to lend," Makhlouf said in his address to the Irish League of Credit Unions conference yesterday. "I urge you to utilise the capacity that exists within the existing house and business loan limits and develop appropriate strategies to grow your loan books prudently."

Strong brand

"When the loan limits have been utilised, or near-utilised, we will ensure that the regulatory framework, including the loan limits, remain appropriate. You don’t need me to tell you that you are starting from a good place. Year after year, the credit union sector comes out on top in studies on corporate reputation. Your brand is known, and is strong."

The Central Bank governor also said that the Credit Union Amendment Bill  provides a significant opportunity for the credit union sector to transform into a community-based provider of universal retail banking products and services but said the sector needed to embrace real change to achieve this.

"We at the Central Bank urge all credit unions — small, medium and large — to consider, or perhaps reconsider, the strategic opportunities that restructuring offers to achieve greater efficiency, build resilience, and build scale. We support larger asset-sized restructuring solutions to build scale, as well as the continuation of transfers between medium and smaller asset-sized credit unions.

“The process can be challenging, perhaps even daunting. But I believe that those among you who have undertaken such a change would encourage your colleagues to embrace the opportunity," he said.