Dáil Éireann Debate, Wednesday - 20 November 2013
35. Deputy Pearse Doherty asked the Minister for Finance if he will establish an independent investigation into the handling by the Central Bank and the special manager of the situation at Newbridge Credit Union. [49196/13]
View answerI am satisfied that the transfer of the assets and liabilities of Newbridge Credit Union to Permanent TSB was the correct course of action in the absence of a willing and suitable credit union transferee. The transfer has brought stability and certainty to the situation and specifically to the members and staff of Newbridge Credit Union and has provided an alternative to liquidation. This transfer also means that Newbridge Credit Union members can be assured that they can continue to operate their loans and savings accounts as normal. The Central Bank has released extensive details of the process on its website including the resolution report and the relevant affidavit. These documents provide full disclosure on the process including the many efforts made to find a credit union-based solution over an extended period of time, as well as the regulatory history and financial details regarding Newbridge Credit Union.
The Central Bank papers document in exhaustive detail the level of bad practice at Newbridge over many years, which created this serious situation and which can be illustrated in the following key lending statistics:
- An individual loan of €3.2 million, which was in excess of the Credit Union Act restriction of a max of 1.5% of the total assets;
- 52% of the loans exceed five years duration, as opposed to the maximum set out in the Credit Union Act of 20%;
- The average loan in Newbridge Credit Union was €17,281 as compared to the average Credit Union loan which is €7,764;
- There were 26 loans of an average value of €550,000, which were seriously distressed.
These figures illustrate that Newbridge Credit Union was operating in a very different way from a normal credit union. The structure of some loans was more akin to development loans with "bullet" repayments as opposed to regular repayments. These factors contributed to its financial difficulties and ultimately meant that no credit union considered that it was in its best interests to combine with it, even in the context of extensive taxpayer support.
The intervention at Newbridge Credit Union was the first resolution action to be taken under the Central Bank and Credit Institutions (Resolution) Act 2011. As with any new process, there will be lessons learned which will inform any future resolution process and it is important that there is time to reflect on this over the coming weeks.
While I do not agree with the suggestion that an investigation ought to be held, I think it is helpful that the Governor is afforded an opportunity to share his views on the process when he meets the Public Accounts Committee shortly.
