The board of Newbridge Credit Union (NCU), which this week received a €54 million government bailout and was subsumed by Permanent TSB, has criticised the "destruction" of the credit union and is exploring legal action to reverse the plan.
NCU was transferred to PTSB after a late-night court sitting on Sunday, following an application by the Central Bank. It was in breach of solvency rules and had operated under the control of the regulator since January 2012.
The board, which has fought with the regulator over the running of NCU for years, said it is working on a plan with its lawyers. It said the financial stability laws used to force the PTSB deal were never intended for credit unions.
"[The law] has left the member-elected board with just one legal avenue open to it, which is to apply to the court to set aside its own decision," said the board, chaired by Ben Donnelly, a council member of industry body the Credit Union Development Association (CUDA).
Legal advice
"The board is consulting with its legal advisers and others in the credit union movement to assess how best to proceed, whether by way of application to set aside the transfer order, or have it varied."
CUDA said on Monday the option to apply for a reversal was open to the directors.
The Central Bank last night insisted, however, that the order cannot be reversed.
“The transfer cannot be undone,” said a bank spokeswoman.
The board blamed a deposits run sparked by the Central Bank seizing control of NCU for its recent financial woes, rather than the mismanagement alleged by the Central Bank.
Permanent TSB has appointed one of its regional managers, Jimmy Nolan, to head the NCU operation and plans to set up a team to review its operation and consider its integration with the bank's local branch operation.
This team will develop a strategy for the bank’s business in Newbridge over the medium term, essentially to evolve it towards a bank bias and away from the traditional operation of a credit union.
Business as usual
A spokesman for PTSB said it was "business as usual" for the credit union's customers and the terms and conditions of all loans will be respected.
In addition, members will be offered an interest rate on their savings in place of their traditional dividend, which has not been paid for the past three years. This is likely to be communicated to them in the coming weeks.
Newbridge Credit Union Action Group, which opposed the PTSB deal, will tonight hold a meeting to drum up support for a new credit union. Its chairman, Willie Crowley, said it wants a "clean sheet" and that former NCU board members would not oversee the new venture.
“PTSB can have all the assets and liabilities – let the shambles go,” said Mr Crowley. He said he has asked the Irish League of Credit Unions (ILCU) for advice and would also approach CUDA, which is a rival body to the ILCU.
Remaining asset
NCU's only remaining asset is its Newbridge premises, valued at €3.9 million, which will be put up for sale by a liquidator to repay some of the bailout. The Office of Public Works has looked at buying it to house offices of the Department of Social Protection.
