DUBLIN, Ireland–Ireland’s Ministry for Finance has reduced the two main regulatory levies imposed on credit unions to provide them with financial head room amid the COVID-19 crisis.
The reductions were announced by Minister for Finance Paschal Donohue who said he was reducing the Credit Institutions Resolution Fund (CIRF) and the Credit Union Stabilisation Levy, given the economic and financial uncertainty arising from the pandemic.
The two levies were established in the wake of the financial crisis as buffers against future instability, reported the Irish Times “However, credit unions have been lobbying the Minister for changes, claiming the sector is now more secure with an €18 billion-strong asset base.”
The Times also reported the country’s credit unions have argued the stabilization levy, set up to assist credit unions whose reserves have temporarily fallen below the 10% statutory reserve requirement, has yet to be claimed against, and is difficult to access.
12-Month Extension Sought
More recently, they have been calling for a 12-month suspension of the charges, in recognition of the extraordinary costs faced by credit unions during Covid-19 crisis, the Times reported.
Donohoe announced a 6% reduction in the CIRF for 2021, and a 90% reduction in the stabilization levy, according to the Times, which added the decision means credit unions collectively will pay €5.3 million in 2021, a reduction of 56% on the €12 million paid in 2019.
The reduction of the stabilization fund charge means that for a credit union with €100 million in assets, the levy in 2021 would have been €16,400 but will now be reduced to €1,554, the Times reported.
“Credit unions play an important role in local communities as a volunteer co-operative movement,” Donohoe said.
League Welcomes Change
The Irish League of Credit Unions welcomed the changes, highlighting the financial impact these levies were having on “not-for-profit credit unions whose sole function is to serve the financial needs of members in their communities,” the Times reported.
“This is a significant cost saving for credit unions which will go some way to alleviating the impact of the Covid-19 pandemic on credit union balance sheets,” said ILCU CEO Ed Farrell.
“We are delighted that our campaigning for our member credit unions has delivered,” he said.