Newbridge Credit Union takeover documents to be made public

The Central Bank has secured orders permitting the public release of some, but not all, of the material used to support its application leading to Newbridge Credit Union being subsumed into Permanent TSB for €54 million.

Any material which would disclose the private affairs of individual members of the credit union will not be disclosed.

The President of the High Court, Mr Justice Nicholas Kearns, made the publication orders today on the application of barrister Brian Kennedy, for the Central Bank, and on consent of the directors of the credit union on condition their affaidavits which are strongly critical of the bank's intervention are also made public.

Ben Donnelly, chairman of the board of directors, said in one of those affidavits it was "most regrettable"  that the "ill-conceived intervention" had, "after two years and great cost to the members, resulted in the loss of credit union services to Newbridge, the loss of its landmark bulding, a loss of confidence in the wider credit union sector and a cost to the taxpayers that amounts to multiples of the regulatory deficit created by the imposition of increased provisions."

The material to be made available relates to the bank’s application more than two years ago to have a special manager appointed to the crtedit union, ultimately leading to the decision last month to subsume it into PTSB.

Mr Kennedy said material would be made available on the bank’s website. The court previously heard there was substantial material involved.

Bernard Dunleavy, for the directors, said their consent to publication was being given on the basis that all the sworn documents of the board would also be made public.

On the application of the Central Bank at a late night High Court sitting on Sunday November 10th, the credit union was transferred to PTSB for some €54 million. This occurred almost two years after the Central Bank had applied to the High Court in January 2012 for a special manager to be appointed to the credit union over alleged breach of solvency rules and after a proposed merger with Naas Credit Union was rejected.

The credit union board had expressed great concern over the PTSB takeover, alleging the financial stability laws used to force the PTSB deal were never intended for credit unions. It also alleged the credit union’s difficulies arose from a run on deposits sparked by the Central Bank seizing control of NCU and not the alleged mismanagement of the credit union.

In an affidavit, Mr Donnelly said the board had been subject to freqwuent criticism by cetrain memebrs of the NCU over the last two years over not being mre vocal about the special management process but it had resdpected the constraints imposed on it.

This had added greatly to the personal stress all the diretcors had endured “while keeping to the forefornt of our thoughts the need to ensure that the destabilising impact of the special management was minimised,” he said.

“It was all the more galling to witness at various critical times the selective leaking of information culminating with the fact of the intended transfer of NCU to Permanent TSB becoming widely known in Newbridge before the Board even had an opprtunity to meet and consider its response”.

He said the Central Bank, “after many years of regulatory restrictions” imposed by it through the registrar of credit unions, had invoked “an untested statutory intervention” based primarily on its views as to the required level of bad debt provisioning “which contradicted what the auditors it had insisted on NCU appointign were recommending”.

A loss of member confidence and a liquidity crisis while the credit union was under the control of the Central Bank and its agents had left it too late to pursue any of the alternative options proposed by the Board, he said.