The board of a West Cork credit union has said "it is simply not credible" to claim a High Court order to wind it up had safeguarded the public interest.
Mr Justice Nicholas Kearns yesterday granted the application to wind up Berehaven Credit Union, Castletownbere, which has 3,500 members. Lawyers for the Central Bank had sought the order.
The making of the application or the order could not be made public until 2pm to prevent a run on the credit union.
Counsel for the Central Bank, Patrick Gallagher, said a review conducted earlier this month highlighted Berehaven Credit Union was at an increased risk of a disorderly collapse that could lead to a run on deposits. An orderly wind-up, he said, was in the best interests of the credit union sector and the State. The Government’s deposit guarantee scheme will apply to depositors with the credit union, he said.
However, the board of the credit union said in a statement it had worked hard to maintain its viability by addressing its debt provisioning and deficit, reducing it from €800,000 to €60,000 in the space of four years.
“Whilst the credit union did everything it could to address the liability side of the business, it was impaired in growing its loan book by the severe restrictions placed on it by the Central Bank. Any business that is impeded in growing its income is destined to fail.”
It said it was “saddened” to learn from a redacted report to the governor of the Central Bank by the Special Resolution Unit that an expensive liquidation of its business was deemed preferable to a direct transfer of the assets and liabilities of the credit union to a transferee union.
“Due to its isolation, where it is 40 miles from the nearest credit union, it is simply not credible to say that the public interest has been safeguarded,” it said.
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