Panicked savers swamp credit union

PANICKED savers swamped a credit union yesterday amid rumours it was facing imminent financial collapse.

Crowds queued at Monaghan Credit Union from 8.30am to demand the withdrawal of their savings after the institution revealed bad debts of €11.9 million.

At its delayed annual general meeting on Wednesday, losses of €3.8m were announced for 2005 and members were told their dividend was being withheld on the order of the national credit union watchdog, Brendan Logue.

But both the union and Mr Logue insisted last night that the union was solvent and all savings were safe.

Pat Fay, general manager and head of monitoring with the Irish League of Credit Unions (ILCU), said anyone who wanted their shares back could get them but he added: “There is no need for any member whatever to be concerned.”

A spokesman for the Irish Financial Services Regulatory Authority (IFSRA), to which Mr Logue reports, said: “The credit union is solvent. There is no liquidity issue.”

Despite a full complement of staff at the Monaghan town office yesterday, by lunchtime manager Regina Connolly had to go on local radio to calm the fears, describing the rumours as “disgraceful and untrue”.

Mr Fay confirmed that an unusually high number of people withdrew their savings yesterday but he stressed the union, which has 17,600 members, had total assets of €98m and could meet all its commitments.

Concerns about the union were sparked last year, when Mr Logue ordered a second audit of the 2005 accounts and the AGM, which normally takes place in January, was postponed.

It is understood the union had not carried out a full assessment of its bad debts for some time and the €7.1m accumulated debts written off for 2005 was far in excess of any previous write-off.

The union used income generated last year to cover some of the write-off but was left with losses of €3.8m. The auditors also required financial provision to be made in case a further write-off was required in 2006.

The ILCU gave a guarantee of €4.7m, which would have covered the provision and allowed the union pay a 1% dividend.

But Mr Logue was advised the guarantee might not be legally enforceable and ordered that payments be withheld.

The IFSRA spokesman said Mr Logue and the union were “making efforts” to resolve the guarantee situation.