RCU is the Registry of Credit Unions in the Central Bank
39. In summary:
A. NCU has a history of regulatory breaches and, importantly, is currently very significantly below its regulatory reserve requirement as reported in the draft financial statements sub mitted on 9 December 2011. This is a very serious matter and is all the more serious given that NCU has not presented a credible business plan to address it;
B. NCU's financial position has deteriorated to a significant extent in the last year. The extent of this financial deterioration was not apparent from the draft financial statements for the financial year ended 30 September 2011, which were submitted by NCU to RCU on 10 November 2011, which reported an operating surplus of €2.6m. It was only when RCU intervened at its meeting with NCU's auditors on 15 November 2011, and expressed concern to NCU's
auditors about the level of provisions, that additional audit work was
performed by NCU's auditors. This additional work resulted in additional
provisions of €16.2m being identified, as reflected in the amended draft
financial statements submitted by NCUto RCUon 9 December 2011. As noted above, thls resulted in a decrease in total realised reserves to €8.8m
(representing 5.4% of its total assets of €161.5m);
C. there remains considerable uncertainty over its true financial position and further analysis is necessary in order to ascertain NCU's true financial position.
The existence of such uncertainty in itself gives rise to serious concerns; and
D. given the above, RCU believe that urgent action needs to be taken to address these issues wit h NCU. For the reasons set out later in this Report, SRU believes that the only way to deal with these in the urgent manner required is to appoint a special manager to NCU.
C. Urgency of situation
40. Traditionally, the Annual General Meeting ("AGM))) of NCU has been held before the end of the year. As at the date of this report, it is not known whether the Board of NCU have held a meeting to approve the accounts or whether the auditors have signed the audit opinion. Additionally, RCU has not, to date, given its permission for the AGM to proceed.
41. At a meeting between NCUand RCUon 15 December 2011, RCU requested NCU not to take any action that would undermine the confidence of the members and cause financial instability in the credit union. At this meeting, RCUrequested NCUto prepare a communications strategy for communications with its members and provide this to