THE banks have warned they will be taking a case against the credit unions to Brussels when the final version of the Credit Unions Act is published. Mr Philip Halpin, who has taken over as president of the Irish Bankers' Federation, said: "Credit unions are exempt from the first and second EU banking directives; they are also exempt from the terms of the EU Consumer Credit Directive."

According to Mr Halpin, chief operations officer at the National Irish Bank, both directives impose regulatory burdens on banks and building societies. "These protections are not being provided to the customers of credit unions, even though these institutions now provide over one-third of personal credit."

Other privileges enjoyed by credit unions were also targeted by Mr Halpin.

Mr Halpin also hit out at An Post. He pointed out that its investment products enjoyed a State guarantee while the interest paid on some of its products was tax-free but there was no requirement to report the income in tax returns.

"There is a growing awareness among banks at a European level that they are being discriminated against by Government in favour of state-owned institutions."

The IBF represents over 50 member institutions. These include licensed banks and subsidiaries operating in the IESC.