Martin warns of credit union losses

Fianna Fail leader Micheal Martin (above) told the Dail a number of credit unions would suffer huge losses due to the decision to liquidate IBRC. Photograph: Dara Mac Donaill/The Irish Times

Fianna Fail leader Micheal Martin (above) told the Dail a number of credit unions would suffer huge losses due to the decision to liquidate IBRC. Photograph: Dara Mac Donaill/The Irish Times

Tue, Feb 19, 2013, 00:00

Credit unions with funds on deposit with the former Anglo Irish Bank face losses of up to €17 million which could affect the viability of a number of them, the Dáil has heard.

Fianna Fáil leader Micheal Martin made the allegation in the Dáil when he highlighted the Governments decision to liquidate the Irish Bank Resolution Corporation and the emergency legislation that passed through the Dáil and Seanad in an all night debate last week.

Mr Martin said the deposits were due to be repaid in September this year and a number of credit unions would suffer huge losses because of the liquidation.

"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.

He 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."

He said the losses involved would at minimum wipe out any shareholder dividends that credit union members might have expected in 2013 and 2014. Even worse he said, it could have an impact on the stability of some of the credit unions concerned.

Asking Taoiseach Enda Kenny 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 however there was a fund of €500 million for the recapitalisation of credit unions if they were in trouble. Insisting that bondholders had been burned to the extent of €15 billion, he said normal deposits are guaranteed here.

Mr Kenny 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 "the first thing we should do is have the liquidator determine what if any is the extent of credit union investment in IBRC".

"If there is a serious situation here as you allege we will determine the true extent of that. The fund of €500 million there for dealing with difficulties with credit unions may be called into play," the Taoiseach added.