Government to save €230m on restructuring of credit unions

Restructuring board says final spend will be less than €250m previously set aside

The Government looks set to save €230 million previously earmarked for the restructuring of credit unions in wake of the financial crash.

The Credit Union Restructuring Board (Rebo) said it now only expected to spend €20 million by the time it winds up in March.

This is significantly less than the €250 million originally set aside for the consolidation process.

When the board was established in 2013, the sector had more than €1 billion in arrears and 51 unions had reserve ratios of less than 10 per cent.


In a review of its work to date, Rebo said many unions had been able to fund the costs of restructuring themselves “thus minimising the requirement for drawing exchequer funding”.

Rebo is separate from the Credit Institutions Resolution Fund, which was set up to directly recapitalise insolvent credit unions. In 2013, Permanent TSB took over the beleaguered Newbridge Credit Union following a €27 million capital injection from the fund.

Rebo indicated the consolidation process could see the number of active credit unions in the State fall to about 300, down from a pre-crash high of 425.


In its report, the board said it had assisted in the amalgamation of 74 credit unions to date, equating to 36 completed restructuring projects.

In total, 189 of the State’s 374 unions have engaged with the board at some stage of their restructuring processes, it said.

There has also been a significant improvement in the percentage of credit unions whose regulatory reserve ratio is greater than 10 per cent.

As of March of this year, 97 per cent of credit unions had a regulatory reserve ratio greater than 10 per cent compared with 87 per cent in 2011.

Rebo’s report indicates there are currently only 12 with reserves below this minimum threshold, the majority of which are engaging with the board.

The deadline for submitting restructuring proposals to Rebo has been extended for an extra three months to March 31st next.


While the number of credit unions has been in decline since the crash, largely due to amalgamations, Rebo said the sector was beginning to grow again. It said some of the larger ones – those with assets of more than €100 million – had been expanding their loan books. That said, 162 credit unions (44 per cent) are still bound by lending restrictions imposed by the

Central Bank

, while a further 74 (20 per cent) are on the regulator’s “watch list”.

Minister for Finance Michael Noonan said: "I welcome this report which provides a comprehensive analysis of Rebo's work to date and of the credit union movement as a whole.

“I am pleased that credit unions are engaging with Rebo as a business strategy to achieve the scale necessary to move to a more efficient and effective business model and as a means of strengthening the sector.”

Mr Noonan said the Government remained fully committed to supporting the credit union movement in meeting the financial, economic and social needs of communities.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times