Credit unions impose savings caps on deposit accounts
Thousands of members have been asked to withdraw some money to meet new limits
At least 36 credit unions across the State have imposed savings limits on their members. Photograph: Frank Miller
Thousands of credit union members across the State are being asked to withdraw some of their savings, as caps are being applied to deposit accounts. Some are imposing saving limits as low as €15,000.
The move is being blamed by credit unions on the costs charged to them by banks to hold that money on deposit, as well as tighter regulatory requirements.
According to research conducted by The Irish Times, at least 36 credit unions across the State have imposed savings limits on their members.
Kildare Credit Union is the latest to introduce a cap on savings, telling members that a new limit of €40,000 would apply from July 1st. Savers who have more than this on deposit will have to find an alternative home for these excess funds.
It follows similar moves from other credit unions around the country recently. Drumcondra Credit Union in Dublin has imposed one of the lowest limits, telling members that they will have to reduce savings to €15,000.
“The current rate of return offered to us from banks is still negative. This means every time we lodge money, the bank charges us,” Paul Reddin, chief executive of Drumcondra Credit Union, told its members.
Credit unions also blame Central Bank rules for cutting the amount of savings they can accept from members. This is because credit unions are required to maintain 10 per cent of their assets as a minimum regulatory reserve.
The credit unions are struggling to cope with record levels of savings – which are up 20 per cent on 2008 – and a low appetite for borrowing. In a historically low interest rate environment, this makes it challenging for credit unions to put these growing savings to productive use, and so many are opting to manage their balance sheets by restricting savings.