Thursday, 3 October 2019

Questions (57)

Michael McGrath

Question:

57. Deputy Michael McGrath asked the Minister for Finance if credit unions will be permitted to hold existing deposits and investments with non-EEA UK institutions in a no-deal Brexit scenario; if so, the contingencies put in place for credit unions in this position; and if he will make a statement on the matter. [40301/19]

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Written answers (Question to Finance)

The Central Bank has advised that the regulatory requirements for credit union investments are outlined in Part 5 of the Credit Union Act 1997 (Regulatory Requirement) Regulations 2016 (2016 Regulations). The 2016 Regulations list the permitted classes of investments for credit unions which includes certain investments with credit institutions where ‘credit institution’ means a person authorised as such under the EU Capital Requirements Directive (CRD IV). Under the 2016 Regulations, credit unions may therefore hold investments in UK credit institutions. However, the 2016 Regulations require that a credit union ensures that any investments made remain in compliance. Post-Brexit, the UK will become a third country (non-EU) for the purposes of the CRD IV. Investments made by credit unions in some UK credit institutions may therefore no longer come within a permitted class of investment under the 2016 Regulations in the event of a no-deal Brexit.  

The Central Bank’s supervisory expectations with regard to Brexit planning is that credit unions regularly monitor and report any potential Brexit associated risks they identify, and record these in their risk registers. Credit unions should consider the risks Brexit may pose to their credit union and in particular what risk mitigants may be appropriate for their own business model and common bond.

The Central Bank is in the process of assessing the potential non-compliance by credit unions with the 2016 Regulations in respect of investments in UK credit institutions in the event of a no-deal Brexit and whether any actions are required to address this potential issue. The Central Bank will communicate with credit unions in this regard, as necessary.