Credit unions still working to deliver quality service to members

IN response to an article “Credit union unable to pay dividend” (December 9), the Irish League of Credit Unions would like to clarify a number of issues in relation to credit union bond holdings in Anglo Irish Bank.

Firstly, only a small number of credit unions hold subordinated bank bonds with Anglo Irish Bank. Subordinated bank bonds with Anglo Irish Bank total €€4.8m not €€28m as stated in the article. The €€28m figure quoted in your article is the total figure of credit union investments in Anglo nationwide.

Secondly, the Registrar of Credit Unions Guidance Note on investments requires that, “investments in a single institution shall not exceed 25% of the total value of the credit union’s investment portfolio”. Credit unions are required to diversify their investment portfolio among banks and due to the recent departure of banks from the Irish market their options on where to place their deposits have narrowed. In October 2010 Anglo Irish announced that it is offering to issue new bonds to subordinated bondholders at 20% of the original value of the bonds.

Up until that announcement the subordinated bonds in Anglo Irish Bank were guaranteed by the Irish Government and credit unions holding these bonds had no reason to be concerned about this investment. However, as a result of this announcement it means that their investments will incur a loss.

This investment loss is a once-off and will be realised by all credit unions holding these investments in this year’s accounts.

Credit unions are working hard to deliver services and are working to strengthen and maintain their record of service.

Kieron Brennan

CEO Irish League of Credit Unions

3-41 Lower Mount Street

Dublin 2