Europe extends Irish credit union resolution scheme

The Irish credit resolution scheme, which provides for the orderly winding-up of credit unions, has been extended until June 30th 2015. The scheme, which was originally introduced in December 2011, enables the Central Bank to proceed "with swift resolution action where such an intervention is required".

On Friday the European Commission approved the prolongation of the scheme, which was originally introduced in December 2011 and was prolonged several times, the last time in July 2014.

The objective of the scheme is to safeguard financial stability and protect the interests of depositors when a credit union is unable to meet regulatory requirements.

The Commission concluded that the scheme was in line with EU state aid rules and in particular with its guidelines on state aid to banks during the crisis.

“In particular, the prolonged measures are well targeted, proportionate and limited in time and scope,” the Commission said.

The resolution scheme also includes a €250 million resolution fund. So far the fund's resources have been utilised on three resolution cases concerning credit unions: Newbridge Credit Union Limited; Howth Sutton Credit Union Limited; and Berehaven Credit Union Limited.