The Minister for Finance today (13 January 2012) noted that the Central Bank had secured a High Court Order for the appointment of a special manager to Newbridge Credit Union.
The special manager will take over the running of Newbridge Credit Union. In addition, the special manager has been assigned the following tasks.
· To undertake a review of the Newbridge Credit Union with a view to ascertaining its financial position and providing an initial report to the Central Bank within one month.
· To develop a plan to restore the institution’s financial position considering all available options and to provide a report to the Central Bank.
Under the High Court Order, the special manager cannot liquidate NCU or transfer its assets or liabilities. Newbridge Credit Union has 14 days to appeal the decision to the High Court.
Newbridge Credit Union will continue to operate and members can access their funds and pay off their loans as normal.
The Minister for Finance fully supports the intervention taken by the Central Bank and was consulted on the intervention, as is required under the Central Bank and Credit Institutions (Resolution) Act 2011.
Commenting on the appointment the Minister said:
“The Government recognizes the important role of credit unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions. As I highlighted in the Seanad (6 October, 2011), there is a need for restructuring in the credit union sector as some credit unions have difficulties and the Government will ensure all necessary measures are taken to ensure a stable credit union sector.
The appointment of a Special Manager is a necessary measure and was taken in the best interests of Newbridge credit union members. There is no effect on the members or staff of Newbridge Credit Union and the Credit Union will continue to operate as normal.
I would like to reassure credit union members in Newbridge and in the wider credit union movement that their savings are secure.”
ENDS
Notes to Editor
Factfile on Newbridge Credit Union (source: Central Bank)
§ Assets - €190m (per the audited financial statements 2010)
§ Members savings - €163m (per the audited financial statements 2010)
§ Membership – c.38,000 – as reported by the credit union per September prudential return.
§ Staff numbers – Approx. 37 (including part time)
What is happening?
The Central Bank has secured a High Court order to appoint a ‘special manager’ to Newbridge Credit Union.
The special manager replaces the management and Board of Newbridge Credit Union and will oversee the day to day operations of the credit union. The role of the special manager is primarily to establish the financial position and bring forward a business plan.
Why is this happening?
The Central Bank states that a number of specific issues arose in relation to the finalisation of the 2011 financial statements. The Central Bank sought the appointment of the special manager to oversee the day to day management of the credit union. This action is being taken to allow the Credit Union to continue to operate as normal and to protect members’ savings.
The draft accounts provided by Newbridge Credit Union show a solvent position and Newbridge Credit Union continues to operate as normal under the special manager.
What is the effect on members?
There is no effect on members. Newbridge Credit Union continues to operate as normal. The appointment of the special manager has no impact on the day to day operations of Newbridge Credit Union.
Members of Newbridge Credit Union do not need to take any action and can continue to do business as normal. All loan and deposit facilities are available as normal.
What is the Minister’s role in all this?
Before the Central Bank can apply to the High Court it must satisfy certain ‘intervention conditions’, including consultation with the Minister. Broadly speaking the Minister’s main areas of interest in the consultation process include broader financial stability implications and any impact on the exchequer or the Resolution fund.
Based on his assessment of the papers Minister supported of the Governor’s proposal to appoint a special manager.
Is the Government putting any money into Newbridge Credit Union?
The appointment of a special manager does not involve a capital injection from the Government to Newbridge Credit Union.
Does this have anything to do with the Minister’s statements about money going into credit unions to sort them out?
The Minister has made it clear that the Government would provide resources to deal with the problems in credit unions if necessary. However, this appointment of a special manager to Newbridge Credit Union does not require an injection of State money, as the role of the special manager is primarily to establish the financial position and bring forward a business plan. The Minister has made it clear that the Government will ensure all necessary measures are taken to ensure a stable credit union sector.
Why weren’t the members consulted?
Under the legislation, there are strict confidentiality requirements surrounding the process. This is to ensure that this necessary intervention can be undertaken without destabilising the credit union. The Act requires the members to be notified as soon as the special manager is in place.
What does this mean for my savings?
There is no effect on members. Newbridge Credit Union continues to operate as normal. The appointment of the Special Manager has no impact on the day to day operations of Newbridge Credit Union.
Members of Newbridge Credit Union do not need to take any action and can continue to do business as normal. All loan and deposit facilities are available as normal.
Do I still have to pay my loan?
The appointment of a special manager does not affect the position of borrowers at Newbridge Credit Union.
Is my money protected?
The deposit guarantee scheme has been in place since 2008 for credit unions and protects savings up to €100,000 per saver per credit union. This appointment of a special manager does not affect people’s savings.
Will NCU still be open for business?
Yes. Newbridge Credit Union will remain open for business as before.
Will the staff remain in place?
There are 37 staff at Newbridge Credit Union. The appointment has no impact on staff positions. Staff will remain in place following the appointment of the special manager.
How long will this go on for?
The special manager appointment is for six months initially. This may be extended subject to High Court approval.
Does the special manager have sufficient knowledge of the sector to carry out the role?
Yes. The special manager appointed has extensive experience in managing and restructuring companies and will be supported by a team of experienced professionals.
The special manager has extensive knowledge of the Irish credit union sector and the broader mutual sector worldwide. The special manager is aided by colleagues who have carried out similar restructuring processes.
Is this the start of the credit union restructuring process?
The Central Bank strategy is designed to be ready to take pre-emptive remedial action to maintain member confidence and protect the financial stability of the sector should issues arise.
The Government believes that credit unions can continue to play an important future role in the Irish financial sector and has established a Commission on Credit Unions to bring forward recommendations by the end of March on the future structure of the credit union sector.
Can more resolution action be expected shortly, particularly as you now have the powers?
Where a credit union has specific issues the Central Bank will work closely with it taking the necessary and appropriate regulatory actions. In all cases the Central Bank will engage fully with those credit unions to seek an agreed solution where possible. The priority is to protect members of credit unions and their savings