Credit Unions Urged To Pay Into 'Stabilisation Fund'
Credit unions should pay into a new fund to help “stabilise” the sector, in which 27 institutions are in serious need of capital, a Government-appointed group has advised, the Irish Times reported. The Commission on Credit Unions, in its interim report, has also called for enhanced regulation of the movement, as well as a greater emphasis on internal audit and risk management. “The regulatory framework is not as well developed as in most mature credit union movements,” said commission chairman Prof Donal McKillop yesterday. Prof McKillop, of Queen’s University in Belfast, also said consolidation in the sector would allow for “a more sophisticated approach” in general. The commission found that 56 of the Republic’s 408 credit unions were in breach of a requirement to keep 10 per cent of their asset base in reserve, as of the end of June this year. Within this group, 27 credit unions had reserves of less than 7.5 per cent. Reserves are designed to allow credit unions to deal with unexpected events, such as an excess of liabilities over assets. Prof McKillop said it was “a very good news story” that most credit unions had met the reserve requirements. He highlighted strong levels of liquidity within the sector as another positive. The commission’s report also shows that credit unions had €1 billion in loans that were more than nine weeks in arrears at the end of June, almost triple the level recorded in 2006. Loans written off almost tripled over the same period, climbing to €107 million, with almost 100 credit unions having arrears in more than a quarter of their gross loan books at the moment. Read more.