Dáil Éireann Debate, Tuesday - 19 October 2021
372. Deputy Thomas Pringle asked the Minister for Finance the number of credit unions that are likely to be permitted to pay a dividend to members for 2021; and if he will make a statement on the matter. [50937/21]
Amharc ar fhreagraThe Central Bank have informed me that they cannot comment on the position regarding individual credit unions.
However, the Central Bank have informed me that in relation to distributions to members, which can take the form of payment of dividends and/or loan interest rebates, credit unions must comply with specific requirements set out in the Credit Union Act, 1997 (the 1997 Act). Specifically in relation to dividends, these are dealt with in section 30 of the 1997 Act which includes a provision that a dividend on shares, not exceeding the permitted maximum, may be declared at each annual general meeting of a credit union in respect of the preceding financial year by a resolution passed by a majority of the members present and voting.
Credit Unions do not require Central Bank permission for the payment of dividends to their members. In accordance with Central Bank credit union regulations, where a credit union has recorded a deficit in its annual accounts and is proposing to pay a dividend and/or a loan interest rebate to members, it must inform the Central Bank in writing at least 3 weeks before it gives notice of its annual general meeting.
In the year-end circular issued to all credit unions in September 2021, the Central Bank set out its expectations on the payment of dividends and rebates in respect of the financial year-end 30 September 2021. This states that, in the context of the 2021 year-end, credit union boards must be cognisant of the continued level of uncertainty of the economic outlook and take a prudent approach to distributions. Maintaining and building adequate levels of reserves, including adequate operational risk reserves, remains key to ensuring credit union financial stability and resilience.
Where a credit union may be considering the potential for a proposed distribution, they are expected to contact their supervisor in the Registry of Credit Unions at an early stage to clearly outline the rationale for proposing such course of action, taking account of liquidity and operational resilience positions and the need to demonstrate prudent forward looking capital reserve management.
Credit unions are currently at an early point of the prescribed period for the holding of their annual general meetings (AGMs) - credit unions are required to hold their AGMs between the months of October and January. If dividend or rebate payments are proposed in respect of the financial year-end 30 September 2021, as outlined above, prior engagement by those credit unions with the Central Bank is expected. Finally, under the 1997 Act, member approval of a resolution on the payment of a proposed dividend is required at the credit union’s AGM.
