Half of Ireland's CUs may report losses

DUBLIN, Ireland (6/1/09)--As many as half of Ireland's 405 credit unions could report losses this year.

The driving forces behind credit unions heading into the red are losses on investments and a sharp uptick in members becoming delinquent on their loans, analysts said (Irish Independent May 29).

Most of the nation's credit unions have sustained significant losses in bank bonds--known as perpetual bonds--which now are worth a fraction of their original value in the wake of the worldwide banking collapse, analysts added.

Also, the inability of as many as 180 of Ireland's credit unions to pay dividends this year will lead to a "catastrophic" run on members' savings, the Irish League of Credit Unions (ILCU) warned (The Irish Examiner May 29).

Losses at credit unions and the need to bolster cash reserves under new regulations could lead to a crisis, the league said.

Kieron Brennan, ILCU chief executive, asked the nation's Financial Regulator not to introduce strict new reserve ratios in September, which will mandate a statutory reserve of 10% of total assets for the country's 405 credit unions.

The ILCU said the new regulations will lessen credit unions' ability to pay dividends to their 2.2 million members.

courtesy of cuna.org