CREDIT UNIONS must adopt more restrictive lending criteria if they are to survive a year of unprecedented difficulty ahead, Brendan Logue, the credit union registrar, has warned.

Mr Logue told the agm of the Credit Union Development Association this weekend that credit unions must change the way they do business to include a greater focus on ensuring they have adequate liquid resources for their operation, with all surplus resources held in liquid form.

Lending criteria must become more restrictive and should be based on conservative estimates of the ability and commitment of a loan applicant to repay, he said, while strict cost controls must be implemented, with capital expenditure curtailed unless strictly necessary.

“The rights of savers must be prioritised over those of borrowers,” Mr Logue said.

It is likely credit unions can expect further losses in 2009 as a result of investments made in perpetual bonds and equity-based funds before last October, when Mr Logue’s office instructed credit unions not to make similar investments in the future. “The chasing of return by credit unions in the past has been akin to a desert traveller chasing a mirage and this has led some credit unions into the quicksands,” he said.