Credit Union Update

In Blog, Business & Jobs, Families, Infrastructure, Jobs, News by Denis Naughten

I recently attended a meeting of local Credit Unions to explore ways that they could help support local economic growth. I firmly believe that the Credit Union movement has a key roll to play when it comes to providing community banking across many parts of Ireland, now that the main banks have left.

The basic independent banking infrastructure already exists but it remains fragmented and instead of a copy and paste a model from some other country we should start with our credit unions, post offices and the two State banks, namely the Strategic Banking Corporation of Ireland and Microfinance Ireland (see more here:

On foot of our meeting with the local Credit Unions, I received the reply below from Minister Donohoe.


Written answers
Tuesday, 1 February 2022
Department of Finance
Credit Unions

Denis Naughten (Roscommon-Galway, Independent)

  1. To ask the Minister for Finance the current status of his review of credit unions; if this review will facilitate credit unions becoming community banks; and if he will make a statement on the matter. [4429/22]

Paschal Donohoe (Dublin Central, Fine Gael)

The Programme for Government includes a number of commitments in relation to the credit union sector.  Work on the Review of the Policy Framework is well advanced and we intend to issue proposals emanating from the Review for consultation shortly.

As part of the Review of the Policy Framework, Minister of State Fleming has conducted extensive stakeholder engagement, meeting with the representative bodies, collaborative ventures, service providers, the Credit Union Advisory Committee, the Registrar of Credit Unions and individual credit unions. The information gained from these meetings will help inform the next steps taken by Government.

In terms of supporting the sector to provide essential financial services to local communities, the following are some recent developments which highlight the potential of the sector to fulfil a role in relation to community banking.

Review of Lending and Investment Regulations

The Central Bank has in recent years reviewed both the lending and investment frameworks. Since 1 January 2020, credit unions now have a combined capacity to provide up to €1.1 billion in additional SME and mortgage loans, with further capacity available to credit unions who can comply with certain conditions or on approval by the Central Bank. As of September 2021, credit unions had a combined mortgage and SME loan book of circa €387 million, an increase of 19% year-on-year.

Credit unions are permitted to place their surplus funds that have not been lent to members in a range of investments including Tier 3 Approved Housing Bodies (AHBs). I am pleased to share with the Deputy that three credit union backed funds have received approval from the Central Bank. Credit unions will be able to invest up to €900 million in these regulated funds, which will subsequently lend to AHBs.

SME Lending 

Nineteen credit unions were approved in early 2021 for participation in the Covid-19 Credit Guarantee Scheme. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book. Further, in November five credit unions were announced as participants in the €330m Brexit Impact Loan Scheme (BILS). The BILS is a successor to the Brexit Loan Scheme and provides low-cost loans of €25,000 to €1.5m to eligible Brexit-impacted businesses. While its predecessor had been available through participating banks, the BILS will now also be available through participating credit unions, ensuring wider accessibility of the scheme.

In total, SME lending has grown 6.9% year on year to end September 2021.

Access to Finance for Retrofit 

The Government significantly increased the funding available to support retrofit in Budget 2022. My officials have been engaging with stakeholders to support increased credit union participation in green retrofit loan schemes.

Other Services

Other than member savings and lending, in order to provide “additional services”, a credit union must receive approval from the Central Bank.

66 credit unions are approved to provide current accounts. 

The Central Bank has prescribed a list of exempt services which may be provided without requiring approval. The Central Bank is undertaking a review of the Exempt Services Schedule to ensure that the services listed reflect the current financial services landscape. The Central Bank has commenced a public consultation seeking views from stakeholders on the proposed changes arising from this review.