THE CENTRAL Bank has imposed lending restrictions on the country’s most troubled credit unions due to concerns over rising levels of arrears and impaired assets.
This follows a warning from credit union regulator James O’Brien last month that an increasing number of credit unions could be heading into financial difficulty.
In the latest agreement between Ireland and its EU-IMF creditors the Government said “immediate steps” are being taken to deal with weaknesses in the most troubled credit unions, “including restrictions on their operations where appropriate”.
A spokeswoman for the Central Bank said all credit unions are required to apply “enhanced scrutiny” to all new loan applications.
“From time to time, where deemed appropriate, as part of our ongoing supervision we may specify particular lending requirements for individual credit unions,” she added. She declined to identify the credit unions affected by the new lending limits.
In the memorandum of understanding published yesterday – which was only slightly amended after Ireland passed its third EU-IMF review earlier this month – the Government said it is implementing a strategy to “underpin the solvency and viability” of the credit union sector.
“Commencing in the fourth quarter we will take all measures necessary to restructure the sector and address difficulties in individual credit unions while minimising any fiscal cost,” it said.
This restructuring process will take account of the interim report of the Commission of Credit Unions, established by the Government to review the future of the credit union movement.
– (Additional reporting Reuters)
