LEINSTER, U.K.–Members of Life Credit Union here have had their savings capped in part due to fees some banks have put in place to accept deposits from credit unions.
The 37,000 members at the credit union, which was created by a merger of CUs in Naas, Newbridge and Maynooth, were sent letters by the credit union informing them a €20,000 deposit cap is being instituted, according to the Leinster Leader. The cap is effective Oct. 1.
“Money held in the credit union is invested in bonds and banks deposits but the return on these has fallen dramatically in recent years and continues to fall,” the Leinster Leader reported.
The credit union’s chairperson, Marion Hanlon, told the publication the cap was put in place due to the high level of savings inflow, which has also had a negative impact on reserves, which are dictated by the Central Bank, as well as a lower return on investments.
29% Loaned Out
Life CU also said in some instances it has been asked by the banks that hold the CU’s deposits to pay them to do so. The credit union said it has a 29% loan-to-deposits ratio and that much of the excess funds are deposited with banks.
Members with more than €20,000 on deposit will not be asked to reduce the balance but if they do they will not be able to put the money back if the balance exceeds that amount. The decision will be reviewed annually, the Leinster Leader reported.
The publication said approximately 5% of members have more than €20,000 on deposit