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Warning over 'end of credit unions'

Published 06/10/2010

Credit unions face being wiped out, officials warn
Credit unions face being wiped out, officials warn

Ireland's credit unions face being wiped out and replaced with a handful of "Tesco-type" super lenders, it has been warned.

Financial Regulator Matthew Elderfield signalled he would not go easy on the voluntary movement which he said had worryingly low cash reserves.

The banking watchdog, which is pouring through the accounts of credit unions across the country, said they have on average 40% less money set aside than they should for bad loans.

"That's a worry to me," Mr Elderfield told a parliamentary committee.

The remarks have sparked fears the Financial Regulator will savage the credit union movement by applying the same strict rules brought in to overhaul the banks.

Sean Sherlock, Labour TD for Cork East, said Leeds-born Mr Elderfield needed to realise the unique place credit unions have in Irish society.

"He's going to strangle a lot of robust credit unions because he's going to apply a blanket provisioning arrangement on them," he said.

"He needs to realise the cultural and social arrangements in Ireland which still allow credit unions to survive and flourish."

But Mr Elderfield said he would not "aim off" the credit unions in the same way the banks were allowed to go unchecked in the run up to the financial crisis.

"If you are asking me to sit on my hands and not look at the credit unions, I'm not going to do that," he said.

Press Association

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From Belfast Telegraph