Newbridge Credit Union would have gone bust if its customers had not been transferred to Permanent tsb in an unprecedented 54 million euro bailout, the Central Bank has claimed.
The bank has reported no major run on deposits as members and clients of the debt-hit local lender protested at the front doors after opening.
Permanent tsb moved to reassure customers that all deposits under 100,000 euro are guaranteed and that existing terms and conditions on accounts and borrowings will apply.
Group chief executive Jeremy Masding said the transfer will bring clarity and stability.
"Permanent tsb has had a branch presence in Newbridge for many generations and we recognise the deep and long-standing relationship Newbridge Credit Union has had with the local community since it was established in 1968," he said.
"Our role is to stabilise the credit union and ensure that this special relationship with the local community is protected."
Mr Masding said the terms of the transfer do not put permanent tsb at any wider financial risk.
Thirty-six staff work at the credit union offices on Moorefield Road in Newbridge.
Despite strong opposition to the Central Bank forcing the lender to be taken over by the bank, Central Bank documents revealed the bad state of the accounts.
It said last night's intervention, when it secured a High Court order for the transfer to permanent tsb, was the only viable option.
In July this year, amid publicity about the state of the credit union's business, there was 91m euro in savings and 11m euro of liquidity resources but inside a week it had fallen by 3m euro - a reduction normally only seen over one month.
Since then 20m euro has been withdrawn - an average of 76,000 euro a day.
Adrian Kane, organiser with trade union Siptu, said concerns of a run on the credit union were completely overstated.
"The retention of jobs is the priority. We will also be seeking an immediate meeting with permanent TSB management," he said.
"We will be hopeful that Newbridge Credit Union can retain its autonomy within the permanent TSB structure with a view to it being re-established as a normal credit union after a period of stabilisation."
There are about 32,000 deposit accounts in Newbridge and 7,000 loan accounts, making it one of the largest in the country.
The Central Bank said that the business had liabilities over assets of 8m euro and was in breach of its requirement to maintain a regulatory reserve ratio of 10%. It described the balance sheet as insolvent.
It warned of a loss of public confidence and no prospect of a remedy.
Other breaches at the credit union included one customer getting a loan of 3.2m euro in late 2009, above the threshold of 1.5% of assets. By the end of September 2.8m euro was still owed.
Last month there were 15 members with savings in excess of 100,000 euro, with a combined total of 2.6m euro, and another 211 customers who are ineligible to have their desposits guaranteed by the state.
The 54m euro bailout will come from a 250m euro fund available to protect credit unions.
"The transfer ensures members' savings are protected and that no member has lost money," the Central Bank said.
Newbridge was not affiliated to the Irish League of Credit Unions.
The Central Bank has directed 15 mergers of credit unions over the past three years and a proposal to merge Newbridge with Naas had been rejected.
Politicians have claimed there has been a lack of transparency about the business since a special manager was appointed last year.
Martin Heydon, Fine Gael TD for Kildare South, called for full disclosure on how the credit union accounts.
"Nobody is defending the way the Credit union was run in the past, however questions have to be asked now about the handling of this whole process by the Central Bank both before and since the appointment of the Special Manager 22 months ago," he said.
Sean O Fearghail, Fianna Fail TD for Kildare South, said the entire process of trying to protect customers at Newbridge Credit Union has been a spectacular failure.
"The appointment of a special examiner to manage the institution has cost over 2m euro alone," he said.
"The whole process has been cloaked in secrecy and the credibility of the directors in Newbridge Credit Union has been damaged. Statements were made about activities in the credit union without people involved having a chance to respond."