The credit union movement should be subjected to a four year restructuring process, the Commission on Credit Unions recommended in a report published today.
A new Restructuring Board should be established to facilitate the process but it would not be the board’s function to “shepherd” individual credit unions that were small or in difficulty, into “an arranged marriage” with other credit unions, commission chairman Prof Donal McKillop told a press conference.
An operational team working on the ground would act as a catalyst for the restructuring of the credit union movement, he said.
This team would identify strong credit unions that could act as anchors to which other credit unions could become amalgamated, and offer advice and funding on such matters as upgrading processes and systems. The decision to engage in the process would be up to each credit union, he said.
Legislation incorporating the main recommendations of the commission is to be published in late June, as agreed with the EU-ECB-IMF troika.
Prof McKillop said there were clear advantages to being bigger for credit unions.
He said Ireland was extraordinary in that approximately 60 per cent of the population was in a credit union, yet the movement had not developed to the extent it had in such countries as the US, Canada and Australia. He said he envisages a long term process of consolidation within the movement.
There were over 23,000 credit unions in the United States in 1969, but only slightly more than 7,300 now, he said.
The commission has recommended a tiered system with varying levels of regulation depending primarily on an individual credit union’s asset size. Credit unions operating on more sophisticated and larger scales, would have regulatory safeguards to match.
Prof McKillop, who is Professor of Financial Services at Queens University, Belfast, said most of the 51 credit unions that had less than the required levels of reserves at the end of 2011 were in the lower end of the spectrum in terms of asset size.
He said there were significant new rules on minimum competency levels and probity coming down the line but that volunteerism would remain the lifeblood of the credit union movement.
