The European Commission has agreed to prolong an Irish scheme to restructure the country’s credit unions.
The scheme was first announced in July 2014, when Ireland notified the EU of its plans to allocate €250m of state spending to support credit union amalgamations, and €30m to stabilise specific credit unions.
At the time, the EC ruled that the scheme was in line with its state aid rules, and said it would strengthen the Irish financial sector, while limiting the risk of distorting competition in the single market. It gave its approval in October 2014.
The decision this month marks the ninth time the EC has agreed the scheme can be prolonged, in order to underpin the stability and long-term viability of credit unions in Ireland.
It was last prolonged in November 2018, and this month’s authorisation is granted until 31 October 2019.
Restructuring under the scheme involves the merging of credit unions that have ample reserves with those that have a gap, to provide them with a capital injection to make up any shortfall.
In February the Central Bank of Ireland published a report on the scheme which said: “Since 2013, transfers of engagements between credit unions have taken place in almost every county, with over 420,000 members moving to larger credit unions, the majority of whom operate from multiple business locations today.
“Restructuring has had a positive impact on the financial position and performance of credit unions as transferees, with higher lending growth and lower growth in operating costs. This provides a strong base for the future development of the sector.”
It said there have been 135 transfers since 2013, noting that trasnferee credit unions outperform the sector in terms of loan rates and lower costs.
Registrar of credit unions Patrick Casey, said: “Since 2013 restructuring has transformed the sector, as credit unions transferred to become part of larger, stronger credit unions, with multiple business locations.”
