@CU Manager : I'm afraid my maths do work.
Most people are unfamiliar with how deposit insurance and the Irish DGS works. If a credit union were to be closed down then savers would be repaid their savings (net of loan exposure) by the DGS within a specified time period (20 days).
A credit union having €100m in unattached insured shares and deposit balances would on closure create an immediate call on the DGS of €100m if all of its customer accounts were each under €100k. You can check how the DGS operates
here. and [broken link removed]
As individual credit union DGS insurance exposure ranges from about €5m to just over €300m - you can see how two or three credit unions could create a call on the DGS for €250m. I can think of two credit unions which together expose the DGS to €500m.
Now imagine a scenario where four credit unions are closed due to a rational run - say the DGS compensation payout is €300m (€75m each). If the DGS was funded by credit unions the ex-post fund would be 0.20% of 11.5bn = €23m. The Central Bank would draw on the €23m and provide the balance of €277m to repay savers their money within the 20 days. It would then recoup the full €300m from the remaining credit unions - this is the reconstitution provision. So the failure of a small number of credit unions carries systemic risks for the credit union network as in effect they are co-insuring each other - they would recoup some but not all of the €300m in time from asset sales and loan workouts.
DI introduces moral hazard risk as members of DI schemes may trade off the guarantee - deposit insurance managers look to manage this risk by demanding higher payments from riskier members and implementing risk controls. This is another reason why for example lending restrictions will be imposed. Not only is the Central Bank concerned for savers funds it's also concerned that no call is made on the fund. In the same way credit unions should also keep a weather eye out for others who may be trading off the guarantee.
The alternative to closure is merger which typically is the option of choice of regulators and deposit insurance managers as it's cheaper than closure. In these cases they are prepared to provide temporary funding to stabilise post-merger balance sheets. Either the deposit insurer does this or there may be a fund created for this purpose. A special stabilisation fund will be set up by the Central Bank here for credit unions with appropriate credit union contributions.