Decade of concern over Charleville credit union

The practices at Charleville Credit Union (CCU) that led to the appointment of a liquidator have been causing concern for over a decade, beginning with a 2007 inspection by the Registrar of Credit Unions (RCU), which found its top 100 loans accounted for 42% of all borrowings.

An independent review conducted at the RCU’s request in 2007 revealed a list of “large business/property-related loans” to 10 members, amounting to €4.1m, or almost 10% of the total loan book.

Most of these loans were not meeting their scheduled repayments.

In 2010, the RCU wrote to the credit union imposing a maximum loan limit of €20k per member.

A loan book review dated February 2010 identified additional provisions for bad debt at €7.1m which reduced the credit union’s reserves from 10.1% to 0.4% as of end September 2009.

CCU has been in breach of the 10% reserve requirement since then.

The details were contained in the partially redacted Resolution Report, published yesterday.

The document details breaches of a number of regulatory directions and contains information about Charleville’s distressed financial position.

The Central Bank said last night that it “decided to use its legal power to apply for the winding-up of Charleville having given due consideration to the circumstances detailed in the Resolution Report”.

“In the absence of taking this action, it was the Central Bank’s view that there could have been a disorderly failure of the credit union.”

Since the appointment of provisional liquidators, the Deposit Guarantee Scheme, administered by the Central Bank, has issued compensation payments through the to approximately 10,900 members of Charleville.

The total amount of compensation paid to date amounts to €39.2m, representing over 99% of depositors covered by the scheme.

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