Warning given over 27 credit unions
Twenty-seven credit unions around the country are in serious financial difficulties and that number will soar in the coming months, it has been warned.
An expert group set up to advise the Government on the problems facing the movement has backed recapitalisation and reform of the struggling lenders.
Its interim report found that 56 branches were below their minimum funding requirements while 27 were deemed to be "seriously undercapitalised". Effectively, these branches do not have enough money put aside to cope with any unexpected difficulties.
But Donal McKillop, chairman of the Commission on Credit Unions, said the 27 branches were only a fraction of the 408 credit union outlets around the country.
He added that members should be totally confident their savings were safe because all deposits up to 100,000 euro were covered by the state guarantee.
Mr McKillop said it was a "relatively good" picture on the overall health of the credit union movement, with more than 350 branches meeting their reserve requirements.
However his report warns unless action is taken "the financial position of a significant number of credit unions will deteriorate markedly between now and 2013".
The group is to hand its final report to Finance Minister Michael Noonan by next March. Last week, Mr Noonan said he would be prepared to pour up to one billion euro of taxpayers' money into struggling credit unions.
Reacting to the report, Mr Noonan said it confirmed the financial downturn, weak governance within the credit union movement and poor regulation had created difficulties for the voluntary not-for-profit lenders.
"The challenges ahead can, however, be overcome," he added.