At least one neighbouring credit union has signalled that it is prepared to take over Charleville Credit Union, which the High Court placed in liquidation on Friday.
Following the appointment of a liquidator, the Central Bank said it would refund the union's 12,000 members their €40 million in savings from its guarantee scheme, which covers all deposits up to €100,000.
As no members of the liquidated union had deposits greater than €100,000, it means that all will be refunded.
Mr Justice Peter Kelly appointed accountants Jim Hamilton and David O'Connor, of Dublin firm BDO, as provisional liquidators to the credit union at the request of the bank.
“Members do not have to contact the credit union or the Central Bank as compensation payments will automatically issue by cheque to all duly verified depositors,” the bank said, adding that money would be paid as early as possible, within the legal deadline of 20 working days.
Meanwhile, neighbouring Mitchelstown Credit Union indicated that it would be willing to take over the business left behind following Charleville's liquidation. Mitchelstown's board said it was open to any action that would restore services to Charleville's members. "If that requires us to extend our common bond to service the members and population of Charleville then we will give that serious and urgent consideration."
The board pointed out that Mitchelstown Credit Union was “very solid”, with reserves of almost €11.6 million and assets of €75 million.
Sources suggested that other unions in the north Cork, Limerick and south Tipperary regions may also be interested in moving into Charleville.
Commiserate
However, Paul Davey, managing director Clonmel Credit Union, which dropped an attempted merger with Charleville earlier this year, said his board had not considered any move. "All we can do is commiserate with the 12,000 members of Charleville and the 13 employees who have lost their jobs."
The Central Bank said it was aware that there was demand for a credit union in Charleville, and pledged to ensure that the service would be available there.
In February, Progressive Credit Union took over Rush, which was wound up the previous November. Also in Co Cork, Bantry Credit Union took over Castletownbere when it was liquidated in 2014.
A deal would allow Mr Hamilton and Mr O’Connor to sell Charleville Credit Union’s loans, giving whoever takes over the business the right to seek their repayment.
The Central Bank said its view was that if it had not applied to have Charleville placed in liquidation it would have resulted in the credit union’s “disorderly failure”.
Charleville Credit Union was not insolvent, but problems dating back to loans given out when the property bubble was its peak 10 years ago meant that its reserves fell short of the level required by the Central Bank.
Reserves
The High Court heard that it failed to bring its reserves up to the regulatory requirement of 10 per cent of assets. Its reserves were just 3.5 per cent last June.
The Central Bank was also unhappy with its poor lending policy, the fact that its costs were high relative to its income, and with its overall business model.
Charleville Credit Union’s board condemned the liquidation as unnecessary and draconian.
“Charleville Credit Union is solvent and its current assets are sufficient to cover its members’ shares,” the board said. “In addition, all members’ deposits are protected by the Government deposit guarantee scheme.”
Justice Kelly gave liberty to Charleville Credit Union’s directors to make any application they may wish to the court in relation to the Central Bank winding up providing it is done by Monday next, and the case can then come back before the court on Wednesday.
