THE IRISH League of Credit Unions (ILCU) has welcomed the Government’s move to review the introduction of new regulations on credit ratios.

In April, the registrar of credit unions proposed a regulatory reserve ratio that would require unions to maintain a statutory reserve fund of 10 per cent of its assets.

The regulator recommended the new reserve ratio be in place by September – a move that would have prevented credit unions from paying a dividend, unless they met the statutory reserve.

Minister for Finance Brian Lenihan is now seeking a review of the reserving proposal.

It will assess the risk profile of credit unions to help gauge appropriate legislative, policy and regulatory issues.

Credit unions league chief executive Kieron Brennan said he was delighted the Minister had decided to review the plans.

“If the registrar’s proposal were to be introduced in its current form, it would have led to a position where hundreds of credit unions around the country would have been unable to pay dividends to members.

“It would have inflicted huge reputational damage on credit unions and damaged people’s confidence in the movement as a whole.”

However, he admitted credit unions were in agreement with the registrar about the need for a level of reserve that would protect members’ interests and maintain public confidence in credit unions.