Credit union bailout fund now contains almost €50m

There is now almost €50 million in the State’s credit union bailout pot, according to figures released by the Department of Finance. Minister for Finance Paschal Donohoe announced minor adjustments to the two regulatory levies imposed on credit unions here while noting that they were there to deal with “any stability threats” to operators within the sector.

The Credit Institutions Resolution Fund levy (CIRF) is to be set at a rate of 0.024725 per cent of assets for 2023, a slight reduction on the 2022 rate, while the Credit Union Stabilisation Levy would be marginally reduced to 0.001484 per cent of assets for 2023.

Both levies were established in the wake of the financial crisis as buffers against future instability.

The CIRF or resolution fund was designed to provide funding for a credit union that has to be wound up. It draws in about €5 million a year. It has a target size of €65 million to be achieved by 2025. The Department of Finance noted that there was just over €49 million in the fund as of June this year.

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The separate Credit Union Stabilisation Levy is there to assist credit unions whose reserves have temporarily fallen below the 10 per cent statutory reserve requirement. The adjusted rate for 2023 will result in a charge of about €300,000 being imposed on the sector here. There is currently around €19 million in the stabilisation fund.

The Department of Finance prepares the annual levy regulations in conjunction with the Central Bank and the Credit Union Advisory Committee. They come into force on September 30th each year.

“My aim is to support the credit union sector to grow and deliver essential banking services to local communities,” Minister of State at the Department of Finance Sean Fleming said.

“We are maintaining the levies to deal with any stability threats at the amounts charged in 2022. The Government will continue our support to grow the credit union sector,” he said.