Bailout of 13 credit unions causes losses of €45.5m
Seven more credit unions have, since December, also sought financial assistance from the league but the cost of bailing these out has yet to be determined.
This brings to 20 the number of credit unions that are in trading difficulties and have sought significant financial help from the ILCU.
The ILCU’s Savings Protection Fund (SPF), set up to fund credit unions in trouble, fell from €118.6m at the beginning of 2010 to €73.8m last December, despite individual credit unions pumping €7.9m into the fund.
The ILCU oversees the activities of close to 500 credit unions on the island of Ireland with 2.9 million members with combined savings of close to €11.9 billion.
The financial statements of the ILCU for the year end December 31, 2010, which have been seen by the Irish Examiner, outline the massive losses made by the league as it attempted to contain the impact of the banking crisis on individual credit unions.
The €45.5m in losses is a huge blow to the organisation, which returned profits of €15.4m in 2009. The losses were made as income increased from €76m to €78.6m.
The accounts show that the SPS fund gave guarantees amounting to €9.8m to four credit unions during the year ended December 31, 2010, and a provision of €9.8m (2009: €2.275m) has been made in respect of these guarantees.
At the end of the year the ILCU had also committed to provide “liquidity facilities” of €9.5m to three credit unions but, as of February 14, none of this cash had been drawn down.
On top of this, as of December 31, 2010, the SPS fund has “constructive obligations to provide financial support to a further nine credit unions” and a provision of €38.6m was made in “respect of the expected cash outflow”.
The impact of supporting the seven credit unions who have sought help from the SPS since December has yet to be determined.
