DUBLIN, Ireland–While credit unions in the U.S. celebrate not only not making any more corporate stabilization payments and even receiving a refund, credit unions in Ireland aren’t so fortunate. The country’s credit union regulator has announced Irish CUs will have to pay a fifth stabilization levy in 2019, according to Minister for
Finance Paschal Donohue.
The stabilization fund was set up in the wake of the financial crisis as a backstop for credit unions that need financial support or aid to maintain their reserves. According to the Irish Times, the goal is to build up a fund of €30 million over 10 years. So far it has amassed just under €10 million. The levy and the amount that it raises will be reviewed after three years, the Times reported.
The outcome of the first review last year was to reduce the rate of the levy (from 0.022% to 0.017% of total assets) while still meeting the original target of €30 million over the 10—year period due to growth in assets for the sector, according to the Times.
What’s Required
The introduction of the stabilization scheme was one of the recommendations of the Commission on Credit Unions which also advised that the scheme be funded by mandatory contributions from credit unions.
To be eligible for consideration for stabilization support, a credit union must have a regulatory reserve ratio equal to or greater than 7.5% of the credit union’s total assets and less than 10% and must in the opinion of the Central Bank, which regulates Ireland’s credit unions, be viable as a credit union, the Irish Times said.