Customers divided between loyalty and nerves over savings

SCORES of customers sought reassurances from Mitchelstown Credit Union yesterday following revelations its financial stability is under threat and that it had been ordered to cease all business lending.

The board of one of the largest credit unions in the country issued a statement yesterday insisting it was solvent. However, it didn’t halt a steady stream of worried members trudging into its office, many withdrawing their savings.

The Financial Regulator’s registrar of credit unions, Brendan Logue, has predicted the credit union, in Co Cork, will have difficulty surviving if a run on members’ savings takes place.

He made his comments following an examination of the credit union’s financial affairs, which showed it had losses on investments of e65 million.

Mother-of-two Helen Mullen said she had been concerned about the financial state of the credit union for some time. “I know a lot of people are withdrawing money as I have done. It is better to be safe than sorry,” Ms Mullen said.

Mary Meaney said: “I didn’t withdraw any money, but a lot of people did. I’d be concerned if the credit union was lost to the town,” she said.

Another customer, Catherine Fitzgerald, said people are panicking. “I’ve never seen a queue like this. People don’t have any trust in financial institutions anymore.” Margaret Hyland, who owns two shops in the town, said she was backing the credit union, but acknowledged many people were concerned and were taking their money out.

“The credit union is vital to the town. It gives loans to younger people who are refused elsewhere. It was the only place my son could get a car loan. It is vital that it continues, especially for the sake of young people,” Ms Hyland said.

Nora Wheeler, a member of the credit union for nearly 40 years, said the organisation had helped a lot of people and it was time they repaid that loyalty by staying with it.

Mitchelstown Business Association spokesman, Tony Lewis, said he believed the regulator’s comments were irresponsible, especially as there was a Government guarantee on savings up to e100,000.

“I would appeal for people to stay calm. The consequences of a run on savings would be serious. The credit union has been a fantastic organisation over the years. It has hit rocky times because of bad leadership in the board over the last few years. It will be strong again,” he said.

The board of Mitchelstown Credit Union, meanwhile, said it wanted to confirm its money is safe. The board emphasised the regulator had stated members should have no reason to be concerned about the safety of their savings, or about the solvency or liquidity of their credit unions.