BRUSSELS–The European Commission has agreed to give Ireland’s credit unions additional time to complete their restructuring.
The original plan was announced in July 2014, when Ireland notified the EU of its plans to allocate €250 million of state spending to support credit union mergers, and €30 million to stabilize specific credit unions, Co-op News reported.
At that time, the EC ruled that the plan aligned with its state aid rules, and said it would strengthen the Irish financial sector, while limiting the risk of distorting competition in the single market. The EC signed off on the plan in October 2014.
The most recent decision marks the ninth time the European Commission has agreed the Irish plan can be extended, “in order to underpin the stability and long-term viability of credit unions in Ireland,” Co-op News stated. It was last prolonged in November 2018.
Mergers & Reserve Building
“Restructuring under the scheme involves the merging of credit unions that have ample reserves with those that have a gap, to provide them with a capital injection to make up any shortfall,” the report stated.
Co-op News additional noted that in February the Central Bank of Ireland published a report on the scheme which said, “Since 2013, transfers of engagements between credit unions have taken place in almost every county, with over 420,000 members moving to larger credit unions, the majority of whom operate from multiple business locations today.
“Restructuring has had a positive impact on the financial position and performance of credit unions as transferees, with higher lending growth and lower growth in operating costs. This provides a strong base for the future development of the sector,” the Central Bank stated.
The Central Bank, which regulates Ireland’s credit unions, said there have been 135 transfers since 2013, noting that “transferee” credit unions outperform the sector in terms of loan rates and lower costs.