Dáil Éireann Debate, Tuesday - 26 May 2015
277. Deputy Michael McGrath asked the Minister for Finance if he will provide detailed information, in tabular form, on the number of credit unions currently operating under lending restrictions; with restrictions on lending to persons; with aggregate monthly lending in bands of €10,000; and if he will make a statement on the matter. [20152/15]
Amharc ar fhreagraI have been informed by the Central Bank that it has been necessary to put lending restrictions in place in credit unions where there are regulatory concerns and resultant risk to members' savings.
Currently about 52% of all credit unions are subject to lending restrictions. Almost all credit unions with a lending restriction in place have a maximum individual loan size restriction as detailed in the table below.
There are two types of lending restrictions:
1. Monthly lending restrictions. At this time less than 10% of all credit unions have this restriction in place which limits the total amount of lending within one month. Therefore, over 90% of credit unions (i.e. over 340 credit unions) have no monthly lending restrictions.
2. Maximum loan size. The average loan size in the credit union sector is just above €6,000. Currently 5 individual credit unions have lending restrictions that limit the amount per loan to less than €10,000. The vast majority of credit unions (over 95%) can continue to make individual loans significantly greater than the average loan size for the sector.
As at 21 May 2015
|
Maximum Loan Size Restriction |
Number of Credit Unions |
|
0 - €9,999 |
5 |
|
€10,000 - €19,999 |
50 |
|
€20,000 - €29,999 |
111 |
|
€30,000 - €39,999 |
5 |
|
€40,000 and above |
18 |
|
TOTAL |
189 |
In February 2015 the Central Bank commenced a lending restriction review initiative, whereby credit unions that are subject to a lending restriction, but are satisfied that they have made the necessary improvements and have embedded these improvements in robust risk sensitive lending practices, may apply for a review of their lending restriction. A communication has been issued to all relevant credit unions outlining the process for the review of lending restrictions and requested them to indicate by 31 March 2015 whether they intend making an application for a review of their lending restriction or not. The closing date for receipt of applications to review lending restrictions under this initiative is 30 September 2015.
I have, on a number of occasions, highlighted the Government's recognition of the important role of credit unions as a volunteer co-operative movement in this country and also the importance of getting lending going in the economy. However, the issue of lending needs to be constructively considered in order to ensure a viable credit union sector into the future.
