Credit union tells members money is safe

Mitchelstown Credit Union in Co Cork has today moved to reassure members their money is safe.

The board of the credit union, one of the country’s largest, made the reassurances today following a warning from the regulator that its financial stability was under threat.

The Financial Regulator’s Registrar of Credit Unions, Brendan Logue, has ordered Mitchelstown Credit Union to stop all business lending. He also said it must limit its personal lending to members to a strict amount each month.

This amount is to be calculated by the Financial Regulator.

The credit union has 17,000 members and assets of €100m.

In a letter to the credit union, Mr Logue wrote: “A run on members’ savings took place last year and it is clear that the credit union would have difficulty surviving a repeat of this.”

However, the board of Mitchelstown Credit Union said today that all savings are protected by the Government guarantee, which covers deposits of up to €100,000.

“The regulator has stated members should have no reason to be concerned about the safety and security of their savings or about the solvency of liquidity of their credit union,” they said in a statement.

However, Mr Logue highlighted that four of the top five loans at the credit union were in arrears by last September, and that significant losses had been made on investments.

A spokesperson for the Financial Regulator today said officials were working with the board of management on a “programme of remedial action” to stabilise financial matters.

Speculation about the credit union’s future attracted more than 700 angry members to the Fir Grove Hotel for an AGM last December. Four new board members were elected on the night after members vented their fury over internal struggles, which they said were hurting the business.

Mr Logue confirmed internal wranglings had contributed to the financial difficulties. He said the appointment of a new manager was vital and the board today insisted every effort was being made to find a manager.

Fianna Fáil TD Ned O’Keeffe, a member of the credit union, said: “I am very concerned. The credit union has been good to people in Mitchelstown, from farmers to small businesses to the motor trade.

“This is a very serious situation. Mitchelstown has had a tough time in the past five years economically and it is crucial that the credit union deals with this quickly.”

Article courtesy of the Evening Echo newspaper.