Dublin credit union axes members’ benefits in bid to cut costs

St Agnes’ Credit Union in Crumlin says measures will ensure viability of business

Credit Union logo. File photo.

Credit Union logo. File photo.

 

St Agnes’ Credit Union in Dublin said it has been forced to curtail several benefits for members in a bid to cut costs. The Crumlin-based credit union, which has 10,500 members and more than €59 million in assets, said it had taken the decision to reduce the life savings benefit limit, paid out to dependants in the event of a member’s death, from €7,700 to €3,000 from next year.

It also plans to end the subsidy on death benefit that the credit union currently absorbs.

The union said the decision was made after a lengthy deliberation on the part of the board, management and staff union and was a matter of considerable regret. However, it insisted the cutbacks would “futureproof” the viability of the union and was in the best interest of members.

Chief executive Raymond Joyce said all credit unions were being forced to economise in the face of a “very challenging” trading conditions.

“Credit unions across the country have seen their loan books fall. In our case, it fell by about 70 per cent from a peak of around €30 million prior to the [economic] crash to under €10 million,” he said. The union’s current loan book is around €11.4 million.

Mr Joyce also highlighted the economic environment of critically low investment returns, noting the union had around €46 million in investments that were delivering “very low returns”.

The third problem, he said, was regulatory costs which came to about €90,000 a year. “We have to be regulated, that’s not an issue, but the costs are substantial,” he said.

Mr Joyce said the union was taking the necessary steps to improve its cost base and there was no question of any deeper financial issues.

There have been a number of high-profile credit union blowouts since the crash.

In 2016, the Central Bank sought legal authority to wind-up Rush Credit Union in north Dublin after it became insolvent. The bank issued €22.3 million compensation payments through the deposit guarantee scheme to some 9,700 members of the credit union.

The Central Bank recently relaxed lending restrictions on credit unions to allow them grow their mortgage and commercial loan books.

Previously there were limits on the amount that credit unions could lend out over five and 10 years .

The Central Bank has, however, removed these maturity limits to give unions greater flexibility to undertake increased levels of longer-term lending.