THE CENTRAL Bank has appointed a special manager to one of Ireland’s largest credit unions over concerns about its financial position.
The appointment to run Newbridge Credit Union in Co Kildare was resisted by the financial institution’s board.
It was the first time use had been made of a special resolution regime introduced last year by the Government to help deal with banks and credit unions that are causing concern.
Newbridge Credit Union has more than 37,000 members and had members’ savings of €190 million at the end of September 2010. It had assets – loans and investments – of €163 million. The difference between the two figures is accounted for by equity and reserves.
The credit union filed a draft financial statement for the year to the end of September 2011 to the Central Bank some weeks ago, sparking concern about the drift in its finances.
This led to contact between the Central Bank and the credit union. More recently information came to light that increased concern.
The appointment of special manager Luke Charleton of Ernst Young under the Central Bank and Credit Institutions (Resolution) Act 2011 was approved by the president of the High Court, Mr Justice Nicholas Kearns.
He was told 2011 draft financial statements indicated the credit union did not hold the reserves required by law and there was considerable uncertainty about its financial position.
Senior counsel Paul Gallagher, for the Central Bank, said the credit union had a history of regulatory breaches and that the bank believed its board was not capable of taking the necessary action in a timely manner.
There was no response to efforts to contact the credit union last night. Its website details how its assets (loans) jumped to more than €200 million in the 2008 financial year, from €100 million six years earlier.
Eligible deposits of credit union members, up to €100,000, are fully State guaranteed.