Monaghan Credit Union was forced to deny it was insolvent yesterday after members turned up to withdraw their funds because they feared it was on the verge of going bust.

The concerns followed the credit union's annual general meeting (agm) on Wednesday evening, which confirmed bad debts of more than €11 million and an instruction last week from the Registrar of Credit Unions, Brendan Logue, that it was not to pay a dividend to its members.

Queues of anxious members began to arrive at its town centre offices from about 8.30am yesterday and its 10 staff were kept busy throughout the day dealing with withdrawals and other inquiries. It has 17,000 members.

At lunchtime, its manager Regina Connolly told local radio that rumours of financial problems at the credit union were "disgraceful and untrue".

She said: "I would like to reassure members that their savings are safe. There is no question about that. Monaghan Credit Union is solvent, in fact we have a better average in the League of Credit Unions of Ireland."

A three-page statement was also posted on television screens in the office assuring members that their savings were safe. Ms Connolly said it held €90 million in members' savings.

Mr Logue said he was aware of the increased number of withdrawals in Monaghan yesterday, but was satisfied they were not substantial. "We have been monitoring the liquidity there quite carefully and are satisfied there were no dramatic changes" he said. "Monaghan Credit Union is solvent."

Some 450 members attended the agm where its board proposed to pay them a 1 per cent dividend as soon as it received authorisation. Mr Logue explained that he had instructed the non-payment of a dividend because the credit union, which has assets of €98.5 million, did not have the required financial surplus to cover the bad debts in its 2005 accounts. After funds from its reserves had been used, the credit union recorded a loss of € 3.8 million.

Monaghan Credit Union didn't pay a dividend in 2004 either when its bad debts stood at €2.2 million. Since then, Ms Connolly said it had introduced new policies and procedures that had identified underperforming loans. Mr Logue said he has taken steps to improve the situation at Monaghan Credit Union, but that it was up to members to seek assurances from their own credit union in relation to their funds.

Credit unions operate as independent entities under the Irish League of Credit Unions umbrella.