Savvi credit union breaches long-term lending rules

Lender says it expects to be back below limit by April or May of this year

Savvi had almost €363 million of assets at the end of its last financial year on September 30th. Photograph: Getty Images

Savvi had almost €363 million of assets at the end of its last financial year on September 30th. Photograph: Getty Images

 

The State’s second-largest credit union, Savvi, has revealed that it breached its long-term lending limits last year.

Savvi, formerly St Patrick’s Credit Union, which had almost €363 million of assets at the end of its last financial year on September 30th, detailed what it refers to as a “material deviation” in its annual report, distributed to members late last month.

“This relates to a breach of the credit union’s credit policy where our longer-term lending limit of 10 years and more is set at 15 per cent of our loan book,” the report said. “Since 30 June, 2017, we have been operating in excess of this limit by up to 1.5 per cent.”

Based on the credit union’s €66.8 million loan book as of September, it would imply that the organisation has more than €1 million of loans above the set level.

A spokesman for Savvi said that the lender informed the Central Bank “immediately” when the breach arose and that a mitigation plan was put in place to rectify the matter.

“We expect to have the excess back within limit by April/May of this year,” the spokesman said. “Procedures have been put in place to prevent a reoccurrence.”

Surplus

Founded in 1962 as St Patrick’s Credit Union dedicated to ESB staff members, the organisation has merged with a number of other credit unions in recent years, including those of Independent News & Media and The Irish Times. It rebranded as Savvi in 2017.

While Irish credit unions are generally restricted to having no more than 10 per cent of their loans at more than 10 years to final repayment, they can apply to the Central Bank to increase this to 15 per cent. Savvi, because of its scale and systems, is likely to be among a select group of credit unions to currently enjoy this additional flexibility.

Savvi, which has 22,000 members, delivered a surplus of €1.88 million last year, down from €4.2 million for the previous year, as a series of costs – from marketing and publicity to legal and professional services and IT expenditure – increased more than income. Total income for the year rose to €9.77 million from €8.65 million.

The credit union had set aside €6.97 million of provisions for bad loans – representing 10.4 per cent of its entire portfolio – at the end of September, up from €6.75 million a year earlier. It wrote off €140,984 of loans entirely during the financial year.