A CREDIT union has had to get a multi-million euro bailout afterrecording a loss of €8.6m because loans have not been repaid. Killorglin Credit Union in Kerry has been forced to write offnearly €3m from last year alone in loans it is unable to getrepayments on. Since 2009, the total amount of loans written offhas come to €6.3m. Now, the 10,000-member credit union has had to be propped up with amultimillion euro support package from a credit union special fund. Last night, the leading lobby group for the sector, the IrishLeague of Credit Unions, insisted member savings were safe and thatthere was no danger of the co-operative lender running out ofmoney. |
"Members' savings are safe and protected under the Government'sdeposit guarantee scheme, and Killorglin Credit Union will continueto operate in the local community and continue to serve itsmembers," a spokesman said. An annual general meeting has not been held for two years, and nodividend was paid for 2010 or for last year, and no rebate has beenpaid on interest on loans. However, a notice of the accounts sent to members shows that an AGMwill now be held on Monday. A copy of the credit union's accounts, seen by the IrishIndependent, shows that in 2010 there was a deficit of €8.6mbefore a rescue deal was agreed from a fund run by the Irish Leagueof Credit Unions.
The accounts state: "The deficit arose principally because of thelarge level of loans written off, the large increase in thebad-debt provision required against loans at September 30, 2010,and a writedown in value of €2,068,057 of the freeholdpremises of the credit union." The league said, on behalf of the credit union, that a number ofmeasures had been taken to strengthen the Kerry lender. "Like most other financial institutions in the current recession,Killorglin Credit Union has faced some challenges, many of whichare historical in nature. Decisions "However, Killorglin Credit Union has taken a number of decisionsand implemented a number of measures to deal with their positionand strengthen the credit union into the future." There have been 28 credit unions bailed out by the league's savingsprotection scheme fund. This has meant that €66m of the€80m fund has been spent.
Loan arrears at the State's 407 credit unions have risen to€1bn in total, according a Government-appointed commission.This is almost triple the level of arrears in 2006. The Credit Union Commission, which reported earlier this year,found that 27 unnamed credit unions were in serious need ofcapital. The Government has set aside €250m this year and the sameagain next year to be pumped into struggling credit unions. Many weaker credit unions are being encouraged by the Central Bankto merge with stronger ones. - Charlie Weston Personal Finance Editor Irish Independent.
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