Two Dublin credit unions plan tie-up to create €370m group

Two of Dublin’s largest credit unions, Progressive Credit Union and Core Credit Union, are looking at merging to create a business with about €370 million of assets.

Core, which has locations in south Dublin and €150 million of assets, and Progressive, with €220 million of assets and based in north Dublin, are in “early stage” talks, according to a spokesman speaking on behalf of both credit unions. It could take 12-18 months to secure a deal following necessary due diligence, as well as approvals from the boards and members of the two credit unions and regulators, he said.

Progressive took over some of the operations of the Rush Credit Union in north Co Dublin, also including a location in Lusk, more than six years ago after the latter ran into financial trouble.

“We continue to view the ongoing consolidation within the sector as an important way of realising synergies and scale,” said a spokesman for the Central Bank, who declined to comment specifically on the talks between Progressive and Core. “All credit unions should consider, on an ongoing basis, the potential benefits to longer-term sustainability that may arise from the completion of transfers of engagements.”

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The merger talks were first reported by the Irish Independent on Wednesday.

Ongoing consolidation across the movement has resulted in the number of credit unions in the State falling to about 205 last September from 214 a year earlier and 428 at the end of 2006, according to a report on the sector published by the Central Bank last week.

The movement, dogged since the financial crash by low levels of lending, had €28.40 out on loan for every €100 of assets at the end of September. While the ratio was up from 27.1 per cent a year earlier, it is down from 49 per cent in 2007. The optimal loan-to-assets ratio is widely viewed to be about 50 per cent.

The Central Bank eased some of its lending restrictions in early 2020 to allow credit unions to engage in more longer-term lending, including home mortgages and business lending.

While many in sector remain frustrated by the limits that continue to apply, the Central Bank report said that there is €1.06 billion of unused capacity in the system for home and business lending. The figure would increase to €2.1 billion if all credit unions with assets of more than €100 million applied to the regulator for leeway to increase loan concentration limits, it said.

Draft legislation aimed at enabling credit unions to co-lend and collaborate more is working its way through the Oireachtas. If enacted, the Credit Union (Amendment) Bill 2022, would enable credit unions for the first time to refer members to other credit unions if they do not offer a particular product themselves – and to participate in loans of other credit unions.