Gardaí were reportedly called to Charleville Credit Union yesterday morning as locals thought it was being robbed when, in fact, it had just been put into liquidation.
The Central Bank said it made the decision to go to the High Court to seek the appointment of the provisional liquidators to the North Cork credit union yesterday morning as it was “in breach of a number of regulatory directions and is in a distressed financial position”.
Once the order had been granted the doors of the business were closed.
Local councillor Ian Doyle said he heard what was happening and went to the credit union where he found a number of gardaí trying to get in because they thought the business was being “held up”.
The now-former credit union board said the Central Bank had played a role in what had happened.
It said it was ironic that the inability to address a required 10% reserve position was the reason for the appointment of the liquidator ”when one considers that seven years of Central Bank restrictions have inhibited members taking out loans, prevented the business investing its savings and ultimately weakened the asset base to the point where it became impossible for the credit union to maintain a 10% reserve”.
“Charleville Credit Union is solvent and its current assets are sufficient to cover its members’ shares,” the former board said in a statement. “In addition, all members’ deposits are protected by the Government Deposit Guarantee Scheme. This course of action will incur large costs to the taxpayer in liquidator’s fees. We fail to see how this expensive course of action is appropriate or necessary.”
However, the Central Bank said it believed there could be “a disorderly failure” of the credit union if action was not taken, adding that all feasible options to raise and maintain its reserves at the required levels had been exhausted.
“The Registry of Credit Unions has been engaging with Charleville Credit Union over a number of years seeking remediation of the weaknesses in its financial position,” it said.
“The Central Bank is of the view that the inability of the credit union to address its reserve position, despite previous receipt of external funding, has resulted in it being necessary to apply for the winding up of the credit union.”
It said the winding up was in the public interest and in the interest of the nearly 12,000 people with deposits there.
The liquidators have been given all the powers of the credit union directors including to carry on the business if necessary and to employ or sack staff as necessary. The Central Bank said it knew there was demand for credit union services in the community and said there may be scope for another credit union to use Charleville as a satellite location.
Charleville Chamber of Commerce president PJ McCarthy said the credit union had, for the past 50 years, served the needs of the people especially individuals and families who had small personal needs.
“We are calling on the Central Bank to ensure that Charleville will continue to have a credit union that will meet the needs of families and individuals as we move into the 21st century,” he said.
As of June, there were 11,735 members of Charleville union. The Central Bank has insisted they will get the value of their deposits by cheques which will issue from next week.
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