The Central Bank has informed me that it is subject to confidentiality requirements under Section 33AK of the Central Bank and Financial Services Authority of Ireland Act 2003 and therefore cannot comment on individual credit unions or disclose the information requested.
Acting as the independent regulator, the Registrar of Credit Unions at the Central Bank has applied lending restrictions to some credit unions. In its recently published 'Credit Union PRISM Risk Assessments: Supervisory Commentary', the Central Bank has highlighted that the majority of credit unions visited have been required to implement actions to remediate risk and substantially improve their lending and credit risk management standards and practices. Where required, risk mitigation has included the Central Bank imposing lending restrictions until fundamental weaknesses are addressed. These lending restrictions have been put in place in credit unions where there are regulatory concerns about the operation of these individual credit unions and the resultant risk to members' savings. The Central Bank advises me that it sees restrictions as short term in nature, to be lifted when risks have been addressed satisfactorily and necessary corrective measures embedded.
Where lending restrictions are imposed they tend to take the form of a restriction on individual loan size or on commercial lending activity and in some cases, a limit on the total lending permitted each month. Currently about 59% of all credit unions are subject to lending restrictions. This compares to a corresponding figure of 57% at the end of 2012. Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction. Of the credit unions with lending restrictions, over 67% currently, which compares with 68% at the end of 2012, can lend €20,000 or more to an individual member.
2.8% of all credit unions are restricted to issuing loans of less than €10,000 to an individual member. The corresponnding 2012 figure was fewer than 2.5%. Fewer than 1% of all credit unions are currently restricted to issuing loans of less than €5,000 per member, unchanged since 2012. These are the cases where there are more significant concerns in terms of risk to members' savings.
For those credit unions where there is an individual loan size restriction in place, the level at which the limit is imposed ensures that the vast majority of those credit unions can continue to make loans significantly greater than the average loan for the sector of just above €6,000. Lending restrictions are, in most cases, intended to be short-term in nature and kept in place until the credit union has addressed the issues giving rise to the particular concerns advised to the credit union.
The Registrar of Credit Unions informs me that lending restrictions are reviewed on a regular basis to determine whether they are still set at appropriate levels. Section 14 of the Credit Union and Co-operation with Overseas Regulators Act 2012 provides for the appeal of certain decisions of the Central Bank, including some lending restrictions, to the Irish Financial Services Appeals Tribunal.