Shock closure of another credit union ‘an assault on rural Ireland’
THE winding up of another credit union has prompted fears for the safety of other locally owned lenders.
Concerns were raised as provisional liquidators were appointed to Charleville Credit Union after an application made by the Central Bank to the High Court.
The closure prompted Charleville residents to accuse the Central Bank of launching an “blatant assault on rural Ireland”.
Troubled Charleville in Cork is the third credit union to have a liquidator appointed. It follows wind-up orders for the Rush branch earlier this year, and Berehaven two years ago.
However, the Irish League of Credit Unions insisted the latest closure does not affect the position of any other credit union.
“Overall, the credit union movement is strong and extremely well capitalised,” it said.
There are 292 credit unions across the country. Savers with money in the Charleville branch were assured by the Central Bank that their funds will be returned to them within a week.
It has 11,000 members and €40m in savings.
The shut-down of the credit union is despite Agriculture Minister Michael Creed directly lobbying the Central Bank a number of months ago in a bid to stave off the closure.
Charleville CU’s former board condemned the liquidation as unnecessary and draconian.
The lender has been struggling for years to bring its reserves up to a point that satisfies the credit union registrar, based in the Central Bank.
High Court President Mr Justice Peter Kelly was told its reserves are just 3.5pc of assets. The Central Bank requires reserves of 10pc.
The Irish League of Credit Unions had been prepared to provide rescue funding to it, but a deal was never finalised.
The High Court has now appointed accountants David O’Connor and Jim Hamilton of BDO as provisional liquidators.
Senior counsel Paul Gallagher, for the Central Bank, said the regulator was unhappy with its poor lending policy, its coststo-income ratio and its overall business model.
Councillor Ian Doyle, who is based in Charleville and is deputy mayor of Cork County, said he was “absolutely furious” that such a closure could be sanctioned while Taoiseach Leo Varadkar was making a high-profile visit to Cork.
“As far as I am concerned, this is a blatant attack on rural Ireland,” he said.
Charleville Chamber of Commerce president PJ McCarthy warned that it was a “catastrophic development” for the town on the Cork-Limerick border.
“The worrying part of this is that credit union members and the entire Charleville community were kept in the dark about what was happening,” he said.
“There has not been an AGM (for some time) and members had no idea what was happening.”
Mr McCarthy said there was a palpable sense of shock when Charleville Credit Union closed its doors at 11am and put a notice in the window about the High Court action.
“It is absolutely devastating for the town,” he said.
“This is clearly going to have a significant impact on the local economy.
“We have worked very hard in Charleville throughout the recession and the subsequent economic recovery to preserve and protect local jobs.”
‘The regulator was unhappy with its poor lending policy, its coststo-income ratio and its overall business model’