Monaghan Credit Union, which has about 16,000 members, will pay its 2005 dividend next week after the regulator revoked an earlier ruling preventing the payment being made.

The Registrar of Credit Unions, which last April issued a decree forbidding the credit union from issuing a dividend to members because of concern about the level of bad debts, said that, following extensive discussions with the union's board, all legal issues that had given rise to the direction had been resolved.

According to the latest accounts for the year to the end of September 2005, the Monaghan union had planned to issue dividends totalling €731,217 after the group's agm at the end of April.

At the time the regulator blocked the payment, saying he didn't believe the union had a sufficient surplus to cover its 2005 bad debts, which including the write-off and provision for bad debts totalling €11.9 million.

As a result of this provision, the credit union recorded a loss for 2005 of €3.8 million - a deciding factor in the April decision by registrar Brendan Logue, but one the credit union attributed to a change in accounting methods.

At the time the regulator said that while it acknowledged that Monaghan Credit Union was indeed solvent and that it had no liquidity issues, the direction had been issued in order to protect members' savings.

However, the announcement triggered a run on the union when many members rushed to withdraw their funds a day after the annual meeting, fearing that it was about to go bust.

Liam O'Dwyer, chief executive of the Irish League of Credit Unions, welcomed yesterday's decision. "The credit union is trading well and continues to offer its members the full benefits of a growing range of financial services," he said.

According to the accounts, the branch has assets of about €98.5 million.