DUBLIN, Ireland–Ireland’s credit union movement is examining ways it could position itself as a viable “third force” to the two pillar banks, by adopting a new structure akin to that of co-operative banks across Europe. The Irish League of Credit Unions (ILCU) has appointed management consultant Eddie Molloy to undertake a review of the movement, and present the report at the association’s annual general meeting next April.
According to the ILCU, the new structure could be similar to that of co-operative banks such as Rabobank in the Netherlands, which consists of 123 local-member Rabobanks. Under such a model there would be more co-operation and standardization in the backoffice between ILCU’s 352 credit unions, including centralized loan decisioning.
“It would do lots the same, and do lots differently,” ILCU CEO Ed Farrell told local media of the potential new structure, adding that while the back office might be different it wouldn’t impact on the experience of credit union members across the local branches.
In terms of capital requirements, Mr Farrell noted that credit unions would need to have €1.3 billion in excess capital to transition to this structure, but noted that credit unions already have almost €2 billion in excess capital.
“We have the capital to do what we want,” he said.
The move comes as the sector continues to lobby the Government over new Central Bank regulations it deems to be unfair.
In January of 2016, new rules will go into effect for Ireland’s credit unions that include lending restrictions that allow only 10% of credit union loans to have a term of more than 10 years. This restricts any “meaningful move” into larger loans while also restricting credit union members from keeping more than €100,000 on deposit, said Farrell.