A CREDIT union has had to be given access to €4.3m from a bailout fund after a spike in bad debt provisions, it has been confirmed.
Charleville Credit Union in Co Cork has been provided with the guarantee, with the money to be given to it if some of its loans are not recovered within two years.
A deficit of €5.5m was recorded after the union was forced to put aside extra provisions for bad debts, due to the severe drop in the value of properties which loans were secured against
Is this your personal experience, or is there any decent research on CU turnarounds? It seems just a tad defeatist to walk away from the problem. Why not just provide good governance and management?Poor governance and management is at the root of troubled credit unions. The only way to promote their continuing operation is through merging them with others that are better run. This is what happens in other countries. Either that or they are wound down. Cases of preserving credit union independence using new boards and management who have turned a credit union around are untypical as this process usually leads to chronically distressed operations.
If a credit union cannot pay a dividend then it is an unsafe place to save as it cannot meet its obligations to savers which is to pay a reasonable rate of return for their money.
Poor governance and management is at the root of troubled credit unions. The only way to promote their continuing operation is through merging them with others that are better run.
CREDIT UNION loans in arrears increased to 14.9 per cent of all loans by the end of June, the Irish League of Credit Unions disclosed yesterday.
The ratio increased from 9.4 per cent at same time last year. League chief executive Kieron Brennan said savings were pledged against 30 per cent of loan arrears.
Write-offs in the year to June were €66 million, or 1.03 per cent of all loans, compared with €51 million in the year to June last year.
The financial regulator also warned the State's credit unions are systemically underprovisioning against loan losses.
"We are finding systemically . . . underprovisioning in the credit union sector," Matthew Elderfield told the committee. "That's a worry to me."
Mr Elderfield said the regulator had discovered credit unions were underprovisioning by 40 per cent and that he intended on dealing with this problem.
I have 75k in my local credit union. I have not been home in a while.
This thread has me a little worried. Is that justified?
75k is over twice the max my local CU will allow you to have in it.
Incorrect, many CUs have no limit - its a free for all - each one makes their own rules so check it out.
Mike
UP to 15 credit unions may need to be bailed out by a special rescue fund in the next three months, the president of the Irish League of Credit Unions told a private meeting at the weekend, the Irish Independent has learned.
This would soak up around €45m of the bailout fund run by the league.
The league, the largest representative body for credit unions with a €125m bailout fund, operates the Special Protection Scheme fund (SPS) to prop up ailing credit unions.
The country's credit unions may need to be significantly restructured if arrears continue to rise and lending opportunities remain subdued, the recently appointed registrar of credit unions, James O’Brien, has warned.
Some credit unions lent aggressively during the credit binge and are now struggling during the downturn.
"Not all credit unions will make it through this difficult financial and economic environment in their current structure," Mr O'Brien told the National Supervisors Forum today.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?