Irish Credit Unions Bail Out Begins

Published by Graham Tomlin for Credit Union Solutions Ltd in Central Government and also in Education, Health, Housing, Local Government

Ireland is taking positive steps to address the growing concerns in the credit union movement there. Increasing levels of unemployment have had a major impact upon the repayment of loans from credit union members causing credit union income levels to slide and deposits to dry up.

Oct 6 (Reuters) - Ireland will be able to recapitalise its credit union savings and lendings clubs by up to 1 billion euros ($1.3 billion) with funds put aside for the country's banks that were not fully used.

"I seriously intend sorting out the credit unions and some of them we'll have to do immediately but we won't do it in one big bang," Ireland's finance minister Michael Noonan told Dublin's upper parliament on Thursday.

"My advice already is that it will cost between half a billion and a billion because the major sorting out is recapitalisation. We recapitalised the banks for less than we expected so we have the resources, we won't have to go back to exchequer for it." ($1 = 0.751 Euros) (Reporting by Padraic Halpin; Editing by Erica Billingham)

The move to encourage consolidation of the Irish credit union industry by mergers and transfers of engagement may not do anything other than increase the size of deficits. 

Interestingly that while Irish Banks cost less than expected to be recapitalised in the UK it looks likely RBS for one might need a second bail out.

As we now know the bank bail outs were due to their buying credit default swaps whose value was dubious. By comparison the Irish credit unions are suffering due to the failure of their members, many of whom were formerly employed in the public sector, to repay their loans.