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 Credit Unions - The Future for Banking in Ireland ?

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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Thu Feb 26, 2009 2:55 pm

The burning issue right now is 5 year loans.

By law, only 20% of the loans in a credit union may have a duration greater than 5 years.

This was slightly problematic during the boom, but now its worse.

People are losing their jobs and asking the credit union to reduce the payments they must make on their loans. So the credit unions are taking 3 year loans (for example) and re-issuing them as 6 year loans to reduce the payment.

The result is that most credit unions are now breaking the 20% rule. Some are way past that line.

I think the minister for finance is going to have to do something to relax or tweak the rule.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 1:06 pm

Mitchelstown credit union has been told by the regulator to stop lending immediately.
The regulator has also expressed concern about 10 other credit unions.

http://www.examiner.ie/ireland/idojidaucw/

Mitchelstown has 17,000 members, making it one of the country's largest community credit unions.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 1:11 pm

Quote :
When contacted by the Irish Examiner Mr Logue
said: "There are some credit unions like Mitchelstown whose risk
profile is higher than the average. However, these are fewer than 10 in
number, out of a total of 419 in the Republic of Ireland. Consequently
members should have no reason to be concerned about the safety and
security of their savings or about the solvency or liquidity of their
credit unions."
I wonder who the other ten are.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 1:17 pm

floatingingalway wrote:
I wonder who the other ten are.
I've no idea.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 1:45 pm

What all countries need is a Conservative, no frills, local Banking Service, tightly regulated, that takes in money locally and invests locally. This needs to be totally separate from the high risk investment banking sector who are basically gamblers.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 1:50 pm

eoinmn wrote:
floatingingalway wrote:
I wonder who the other ten are.
I've no idea.
Bad form from the Regulator in my book. The warning is in De Paper but not on their own site. Could it be they'll cause a run on all CUs to avoid a run on the 10 dodgy ones?
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 2:06 pm

coc wrote:
eoinmn wrote:
floatingingalway wrote:
I wonder who the other ten are.
I've no idea.
Bad form from the Regulator in my book. The warning is in De Paper but not on their own site. Could it be they'll cause a run on all CUs to avoid a run on the 10 dodgy ones?
I was thinking over the weekend, before I heard this story, that boards need to start publishing letters from the regulator at the AGM.

Or as you say, the regulator could start publishing the letters online.

I think members have a right to know.

The short term effect however would a loss of confidence in the credit unions which would be a pity.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 2:14 pm

All deposits are guaranteed by the Government up to 100,000.
There is also a national credit union deposit insurance scheme.

After the Galway incident, I would want us to start another run on the banks ...

Suspect bounce bounce bounce bounce bounce bounce
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 2:17 pm

cactus flower wrote:
All deposits are guaranteed by the Government up to 100,000.
There is also a national credit union deposit insurance scheme.

After the Galway incident, I would want us to start another run on the banks ...

Suspect bounce bounce bounce bounce bounce bounce
What Galway incident? albino
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 2:19 pm

eoinmn wrote:
coc wrote:
eoinmn wrote:
floatingingalway wrote:
I wonder who the other ten are.
I've no idea.
Bad form from the Regulator in my book. The warning is in De Paper but not on their own site. Could it be they'll cause a run on all CUs to avoid a run on the 10 dodgy ones?
I was thinking over the weekend, before I heard this story, that boards need to start publishing letters from the regulator at the AGM.

Or as you say, the regulator could start publishing the letters online.

I think members have a right to know.

The short term effect however would a loss of confidence in the credit unions which would be a pity.

Can anyone not see correspondence if they ask ?

It'd be worth it to have all regulatory stuff among other stuff pinned up just inside the door of the CU. Don't they have quarterly reports or just annual ?

Can members not request that letters and other stuff be published or how does it work. Transparency.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 2:29 pm

Cork incident surely, CF?

Audi, quarterly reports are made to the regulator. Legally, only an annual report must be published, and it is not as detailed as the quarterly report in some respects, and more detailed in others.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 3:31 pm

eoinmn wrote:
The burning issue right now is 5 year loans.

By law, only 20% of the loans in a credit union may have a duration greater than 5 years.

This was slightly problematic during the boom, but now its worse.

People are losing their jobs and asking the credit union to reduce the payments they must make on their loans. So the credit unions are taking 3 year loans (for example) and re-issuing them as 6 year loans to reduce the payment.

The result is that most credit unions are now breaking the 20% rule. Some are way past that line.

I think the minister for finance is going to have to do something to relax or tweak the rule.

It would be surprising if a few of the Credit Unions hadn't lost the marbles a bit.

There are a lot of people who owe more than they could ever expect to pay back. Inflation is their best hope.
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PostSubject: Re: Credit Unions - The Future for Banking in Ireland ?   Tue Mar 03, 2009 3:56 pm

eoinmn wrote:
Cork incident surely, CF?

Audi, quarterly reports are made to the regulator. Legally, only an annual report must be published, and it is not as detailed as the quarterly report in some respects, and more detailed in others.

Is that true for all credit institutions - they must report only once annually ?

Would there be any use for them to be put up on the net or something 4 times a year or is that overkill ? There are plenty of trainspotting Auditors out there who can't get enough of the that stuff - they might spot something in case it was going skew-ways.

Must start a thread on regulation....
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