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Ireland Central Bank proposes stabilization plan for CUs
DUBLIN (6/25/10)--A consultation paper for Ireland's Central Bank has proposed six options for the Irish League of Credit Unions' Savings Protection Fund (SPF) that legislators could consider to address what the bank terms as increasing financial pressures on that country's credit unions. Ireland's registrar of credit unions, James O'Brien, commented in a consultation paper for the Central Bank that the Irish credit union movement has "significant stresses" from loans in arrears. However, the league says credit unions are well-placed to withstand the economy (Irish Independent and The Irish Times June 24). The league's protection fund has about 1% of total assets of Ireland's credit unions, said the Times, which outlined two problems: the amount is inadequate in a widespread economic downturn, and the league's plan is not available to nonmembers of the league and those credit unions don't contribute to the fund. Options discussed include keeping the status quo, providing an external solvency support mechanism to provide short-term support to credit unions in difficulty, and various statutory and voluntary proposals. The Central Bank said it favored the external solvency mechanism, adding that the SPF could act as a "bailout" fund for all credit unions. The league said credit unions had losses on investments, but the vast majority had written off their investment losses in their accounts last year, according to the Independent. Although credit unions have seen an increase in loans in arrears, they take a "responsible approach" with "prudent loan provisions and increased reserves." That means "credit unions are well placed to withstand the current and future difficult economic times," the league told the publication.


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