WEXFORD CREDIT Union is unable to pay a dividend to its members this year because it has been forced to write down a €3 million investment in Anglo Irish Bank.

Manager Ultan Ryan said the credit union owned subordinated Anglo bonds worth €2.99 million, an investment which has now been written down by 80 per cent.

Unlike senior bondholders, subordinated bondholders have been forced to share some of the pain of Anglo’s collapse and the credit union was informed in October that it was only being offered 20 cents in the euro – meaning that it has had to make a €2.4 million provision for this bad debt in its accounts this year.

The credit union has also had to write off a further €2.2 million in bad debts generally, up 98 per cent on last year’s figure of €1.1 million, in what Mr Ryan called a “very challenging year”.

He said the €2.4 million loss the credit union was absorbing on its Anglo investment was commensurate with the amount that comprised the dividend for its 33,000 members each year.

“This is the first time in the credit union’s [48-year] history that it has not paid a dividend and people are disappointed that they are not getting the small cash bonus that they usually get at this time of the year this year,” Mr Ryan said.

“The €2.99 million investment in subordinated Anglo bonds represents 4 per cent of our total investment portfolio but we would like to assure our members that we hold no other subordinated bonds in any other Irish banks.”

Mr Ryan said the credit union had held a cash deposit with Anglo but this had now been withdrawn from the bank. The investment in Anglo had been made in 2004.

Asked why the credit union had invested in subordinated instead of safer senior bonds, Mr Ryan said it was a “permissible investment” which had, until recently, been covered by the State’s banking guarantee.

A spokesperson for the Irish League of Credit Unions said its members had a €28 million exposure to Anglo.