Credit unions 'burned' in IBRC move - FF

Credit unions have been “burnt” by the liquidation of the former Anglo Irish Bank with huge losses of up to €17 million, Fianna Fáil leader Micheál Martin has claimed. But Taoiseach Enda Kenny insisted there was a €500 million fund to help credit unions in difficulty.

Mr Martin warned in the Dáil that there would be no shareholder dividend to credit union members that might be expected for 2013 or 2014. “Worse, it could have an impact on the stability of some of the credit unions concerned,” he said.

And he claimed the Government had burnt “the banks of the ordinary people”.

‘Incredible situation’

During Leaders’ Questions the Fianna Fáil leader said a number of credit unions had funds on deposit with Irish Bank Resolution Corporation, formerly Anglo Irish Bank. “Sources within the credit union are saying that the losses could be as high as €17 million for credit unions across the country, which is an incredible situation if that is the case,” he said.

The Cork South-Central TD questioned why special provision had not been made for credit unions in the legislation to liquidate the IBRC.

The legislation was passed in an emergency overnight session in the Dáil and Seanad last week but Mr Martin said the Government had been planning the Bill for some time and officials had surely considered the impact on all depositors.

He said the deposits were due to be repaid in September this year and a number of credit unions would suffer enormous losses.

The Fianna Fáil leader claimed the Government had failed to honour its election promise to burn bondholders. “And now we are in a situation where credit unions, the banks of the ordinary people, have essentially been burned as a direct consequence of this decision” to liquidate IBRC.

Extent of losses

Asking the Taoiseach if he was aware of the extent of the credit union losses, he added: “It seems the only incidence in the euro zone to date where depositors have taken a direct hit as a result of the decision to liquidate IBRC in the manner you so decided.”

Mr Kenny said there was a fund of €500 million for the recapitalisation of credit unions if they were in trouble.

He was not aware of the full extent of any liability of any credit union or numbers of credit unions. That remained to be assessed, he said.

“This is a liquidation and clearly the liquidator is examining all of the issues that arise following the liquidation of IBRC.

“You are aware that €15 billion worth of bondholders have been burned already. Normal deposits are guaranteed here. It’s impossible to distinguish between guaranteed and unguaranteed here,” the Taoiseach said.