DUBLIN, Ireland–Ireland’s credit unions are calling on the government to remove the “handcuffs” that limit their ability to make mortgage loans.
The Central Bank of Ireland, which regulates the country’s credit unions, currently limits mortgage and SME lending to a combined maximum of 7.5% of a credit union’s total assets.
For example, a credit union with assets of €70 million, that makes an average mortgage of €350,000 can only offer 15 mortgages under the current limits, exclusive of any SME lending, noted the Irish Examiner. If the CU participates in SME lending, then the number of mortgages they can offer reduces accordingly within the 7.5% lending limit.
By the end of 2021, only two credit unions received approval from the Central Bank for a 15% lending limit, as their assets totaled at least €100 million, according to the Examiner.
The Irish League of Credit Unions has responded to comments made by minister of State Sean Fleming, who said that “credit unions should fill the gap left by the departures of Ulster Bank and KBC from the Irish market and start lending more mortgages,” the Examiner reported.
Fleming said credit unions are “not doing enough of lending.”
Key Provider
The government has said its committed to enabling the credit union movement to grow as a "key provider of community banking in the country.”
"In order for credit unions to become community banks, and to really engage in the mortgage market, the ILCU is asking Minister Fleming to address the imbalance caused by the restrictive regulatory lending regime in his soon-to-be-published review of the policy framework within which credit unions operate,” ILCU deputy chief executive David Malone, told the Examiner.
According to the government, the publication of its framework presents a once-in-a-decade opportunity for the minister to empower credit unions to realize their full potential in filling the gap left by Ulster Bank and KBC and in doing so, offering a community-based alternative to the remaining banks to the Irish public.
"The ILCU is ready and willing to constructively engage with Minister Fleming and his officials in achieving this aim,” the league told the Examiner.