This Bill gives effect to the dissolution of the Credit Union Restructuring Board. In summary, the Bill provides for the dissolution of the Credit Union Restructuring Board, the transfer of certain functions of the Credit Union Restructuring Board to the Minister for Finance and makes the relevant amendments to the Credit Union and Co-operation with Overseas Regulators Act 2012.
I will give some background on the establishment of the Credit Union Restructuring Board. Further to the 2011 to 2016 programme for Government, the Government established a Commission on Credit Unions. A core recommendation of that commission in its 2012 report was that the sector should be restructured on a voluntary, incentivised and time-bound basis. It was further recommended that a new body, the Credit Union Restructuring Board, or ReBo, should be established on a short-term basis to engage with credit unions and to oversee and facilitate the restructuring and amalgamations of credit unions. ReBo was established on an administrative basis in August 2012 and it was put on a statutory footing on enactment of section 42 of the Credit Union and Co-operation with Overseas Regulators Act 2012 on 1 January 2013.
Part 3 of the Credit Union and Co-operation with Overseas Regulators Act 2012 provides the legal foundation for the restructuring process, including the establishment of ReBo on a time-bound basis and the dissolution of ReBo on the completion of its work under section 43 of the 2012 Act. When the Minister is satisfied that ReBo has completed the performance of its functions under Part 3 of the 2012 Act, he can then dissolve ReBo.
The Minister carried out two section 43 interim reviews, the first in 2015 and the second in 2016. There was also a final section 43 review in June 2017. The second interim review, in October 2016, recommended that ReBo be given until 31 March 2017 to complete any outstanding restructuring projects and then be wound down in an orderly fashion. The purpose of the final section 43 review in June 2017 was to assess the work of ReBo over its lifetime to determine whether its work was complete.
Taking account of each aspect of ReBo's functions, and following due consideration, examination and detailed analysis of its work, the final review in June 2017, under section 43(2)(b) of the 2012 Act, concluded that ReBo had completed the performance of its functions to the highest standards and an orderly wind down of ReBo’s operations was recommended. In addition, ReBo completed its restructuring work with a minimal call on Exchequer resources compared with original expectations.
I will briefly outline the extent and manner of ReBo’s work during its short lifetime. ReBo was led by its chairman, Mr. Bobby McVeigh, and its board members included members from the main credit union representative bodies, including the Irish League of Credit Unions, the Credit Union Development Association and the Credit Union Management Association, a Central Bank non-voting member, a Department representative and independent members appointed by the Minister for Finance. ReBo staff were employed on fixed-term contracts, which expired on or before 31 July 2017.
ReBo's role was to plan for the restructuring of the credit union sector, engage with and assist credit unions in the preparation of their restructuring plans, consider and decide on restructuring plans submitted to it by credit unions, oversee the implementation of restructuring plans, including the provision of post-restructuring support, and oversee the operational functions of ReBo. Following on from ReBo's role in the restructuring process, the Commission on Credit Unions recommended that any restructuring proposals must have the endorsement of the ReBo board before being submitted to the Central Bank for regulatory approval. Funding requirements should be determined based on the credit union assessments and funding should be provided from one of three sources in the following order: excess capital from within participating credit unions; the sector itself; or Exchequer funding on a recoupable basis.
The final date for restructuring was initially 31 December 2015, but that was extended to 31 March 2016 following the interim section 43 review of ReBo's work in 2015. After that date, no further restructuring proposals could be accepted by ReBo. In March 2017, ReBo completed the performance of its functions in accordance with the 2012 Act. While some 210 credit unions were involved in 117 potential restructuring projects, at the end of its operational life ReBo had facilitated and overseen the full restructuring of 156 credit unions in 24 counties under 82 projects with assets of almost €6 billion. This equates to approximately 38% of total credit union assets at that time. Some of the uncompleted projects were handed to the Central Bank for further consideration.
The Government provided €250 million in the credit union fund that was established specifically for credit union restructuring. Half of ReBo's administration costs were met from the credit union fund and were met by way of a ReBo levy on the credit union sector. Under the 2012 Act, ReBo could, with the Minister's consent, make regulations prescribing a levy to be paid to it by credit unions and when such a levy would fall due to be paid. In 2014, 2015, 2016 and 2017, ReBo made regulations requiring credit unions to make a contribution towards ReBo's operating costs.
To its great credit, and to the credit of the sector itself, of the €250 million provided to the credit union fund, all but €11.6 million was returned to the Exchequer in 2018. The lower than anticipated spending on restructuring was essentially because the majority of credit unions participating in restructuring projects financed those projects from within their own resources. Where there was a shortfall, financial assistance was provided in certain cases by the Irish League of Credit Unions using its savings protection scheme. Combined, this resulted in a much lower cost to the Exchequer than anticipated by the original commission.
As I mentioned, some of ReBo's uncompleted projects were handed to the Central Bank. In addition to those projects, new restructuring projects have commenced directly with the Central Bank. When ReBo ceased accepting new applications for assistance, the Registry of Credit Unions issued a circular and explanatory note to all credit unions advising interested credit unions to engage directly with the Registry of Credit Unions. The Registry of Credit Unions also updated the credit union handbook to include information on the restructuring process. While restructuring has continued post ReBo, the pace has slowed somewhat with a total of 57 transfer of engagements confirmed: 19 in 2017, 15 in 2018, 12 in 2019 and 11 in 2020 to date. I am informed that nine transfers of engagements are currently under way.
Completing 82 projects involving 156 credit unions across 24 counties was a huge achievement for ReBo, particularly in such a tight timeframe. It is commendable that the credit union movement provided financial support from within its own resources and minimised the call on Exchequer funding.
Following the resignation of the board on 31 July 2017, a caretaker board comprising two Department of Finance officials and an existing director, the Central Bank-nominated non-voting director, has been appointed in order to meet the requirements of the 2012 Act. The caretaker board must remain in place until ReBo is dissolved via this Bill.
I look forward to hearing the views of Senators in the course of the debate on the Bill, which provides for the dissolution of ReBo, the transfer certain functions of the Credit Union Restructuring Board to the Minister for Finance, the amendment of the Credit Union and Co-operation with Overseas Regulators Act 2012 and the consequential amendment of other enactments. I commend the Bill to the Seanad.