Credit unions may have to pull €1.8bn from UK in chaotic Brexit

Credit unions in the Republic may have to withdraw €1.8 billion of deposits and investments lodged with financial institutions in the UK in the event of a disorderly Brexit, it has emerged.

Fianna Fáil’s spokesman on finance, Michael McGrath, has raised concerns about the matter this week after he received a response to a parliamentary question, which clarified that credit unions will not be allowed to hold investments in institutions in a so-called third country outside the EU.

Ed Sibley, a deputy Central Bank governor, told reporters at a briefing on Tuesday that about €1.8 billion of Irish credit union investments in the UK are potentially affected and that his department will be communicating with the sector on the matter in the coming days.

"We will be pragmatic about it," Mr Sibley, when asked if a no-deal Brexit could trigger an immediate requirement that credit unions pull UK investments.

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Investments

Credit unions in the State had €12.4 billion of investments at the end of March, according to data published by the Central Bank in August. Almost 76 per cent of the amount was made up of deposits in authorised credit institutions.

On that basis, UK deposits and investments account for 14.5 per cent of the total.

“I am concerned that this is only being looked at now,” Mr McGrath said. “It shows once again that, if the UK had crashed out last March, we would have been completely unprepared.”

EU and UK negotiating teams are seeking to put legal language on a potential Brexit deal, after Taoiseach Leo Varadkar and UK prime minister Boris Johnson declared last week that there was a "pathway to a possible deal" after a meeting in a Merseyside manor in England.

The UK is scheduled to leave the EU at the end of this month.