Central Bank issues €500k tender to print cheques for savings lost with failed banks and credit unions
The Central Bank is to spend up to €500,000 on printing and personalising cheques for people who may lose their bank savings as part of the deposit guarantee scheme. File picture
The Central Bank is to spend up to €500,000 on printing and personalising cheques for people who may lose their bank savings as part of the deposit guarantee scheme.
The bank, which operates as Ireland’s financial regulator, has invited applications to tender for the contract to produce and distribute the cheques in question.
While the deposit guarantee scheme was first introduced close to 40 years ago to protect citizens whose deposits may have lain with banking institutions which subsequently failed, it was substantially upgraded in 2009 for all EU member states in response to the global financial crisis.
Multiple large global institutions were brought to their knees from early 2007 onward as the worldwide supply of credit slowed to a trickle, leaving banks in a massive liquidity crisis.
As of June 2009 a person can hold sums of €100,000 on deposit across separate financial institutions and the State will guarantee to repay that sum in the event the institutions in question fail.
That upgrade to the guarantee scheme followed the then Government’s decision to issue a blanket €440 billion guarantee regarding the assets and liabilities of the country’s six largest banks in September 2008, a decision which eventually led to the State having to be bailed out by the EU and International Monetary Fund in 2010.
A spokesperson for the Central Bank noted that its new tender is a successor contract to separate agreements offered in 2019, for banks and credit unions, and which is due to expire this year.
The spokesperson said the new tender will consolidate the existing arrangements into one and that it is “not possible” to precisely predict what the overall expenditure under the new contract will be, adding it could be “significantly lower or potentially higher than the advertised estimate of €500,000”.
To date, the guarantee scheme has been invoked only for the failure of credit unions, the most recent instance being the €12.9m paid to the 4,600 members of Dublin’s Drumcondra and District Credit Union, which failed in July 2020.
That payout served to cover roughly 95% of the deposits held in the credit union at the time of its failure.
The largest payout prior to that event was €39.2m to the 11,000 members of the Charleville Credit Union from October 2017. That institution failed as a result of being unable to meet its statutorily required cash reserve levels after a series of failed merger attempts.
In November 2016, meanwhile, some €22.3m was paid out via the guarantee scheme to the close to 10,000 members of Rush Credit Union in north Dublin after it collapsed ignominiously after a period of severe financial mismanagement.
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