Regulator to stress test Credit Unions

businessworld.ie/livenews.htm?a=2639390

This not going to be nice…

Actually the more I think about this, the more negative I become…and thats difficult for me.

We are going to lose an awful lot of these, and I’ll put my bet down now… Eircom will be a pimple in comparison.

XX and I hate that smilie, but its apt.

It was bound to happen, but if the report is published, it’ll not make nice reading. Please don’t anyone get me wrong, I love the CU’s and there are many well run, but ohhhhhh dear…

Any bets on how the various Garda credit unions will fare? :wink:

Why exactly are the credit unions in trouble? They dont dish out mortgages (besides the Garda Credit Union)…Do they?!
Is it a case people are not paying off CU’s to pay off their mortagages?

They actually might be ok… ish

Bishopstown agreed a JV with one of the banks during the boom, and guaranteed .25% less on the interest rate, I think it was a rebate on interest paid at year-end.

The Loan Book is some €7bn ish, with assets of €15bn, I’m not concerned about the asset side but the liability side will take some understanding by Grants, especially resolution 11/49… Bad Debts etc, and the methodology employed for recognition of those Bad Debts will become a major issue IMO.

Add in the €1bn “bonds” sold by Davy & Others,poor IT, Low( NO) internal controls, trust at its cornerstone…never mind large deposits paid by families at war with each other. SP insurance, not allowed to revalue land and buildings that it owns, Ltd structure, Directors unaware of Companies Acts, non accrual accounting, little business planning, strategic planning… its a very long list

This will not be pretty…

And yet great people running them for free, which is what it was designed for, local S&L to help the community at large and promote thrift.

I should have added to my previous posts, that this review needs to review the League and CUDA, CUDA is a splinter group, but the League is backed internationally, and frankly its a law unto itself. 2.3million members of the CU’s in Ireland are not going to like this, as most will see it as an attack on ordinaries…

So I think the review is necessary, but this needs to handled with care cause no party wants to disenfranchise 2.3m people.

I have a tee-shirt btw.

Nice one for the infor Bob…

Didn’t Bishopstown CU look to introduce some ATM card and a CU course with UCC or something? I remember thinking at the time that the direction seemed to be that of a bank than a CU.

The CU course is there, and a good one also… the movement tried to introduce a global (Ireland) ATM system but when it cost £33m ish and was found not to work it went the same way as electronic voting.

Many CU’s now have standalone ATM’s, Bishopstown has one, Naas, Navan,to name a few, but their IT systems have being changed to allow for this, a point that I applaud…

I love the CU’s and should they collapse our unemployment will rise by 200,000, my guess, as many small firms use it as a place for working capital, not much maybe €1000 every couple of weeks, but when Grants do this, they need to be mindful of this fact, but I think that they’ll ignore that.

I have done, reviews in CU’s, Business/Strategic plans etc… and when I reported I was kicked hard, which I didn’t mind so much as I was a one man band… this is going be so much different.

Again I agree with the review, but its the handling of it will be crucial

Did anyone hear the CEO of the League this morning on RTE1’s morning Ireland?

He didn’t sound convincing, he said that he was unaware of difficulties within certain CU’s, and gave a bad debt percentage of 13%, and then mentioned something about bank backed loans, which I only had one ear listening, he said that bad debts are about €400m.

Loan Book €6.8bn at 13% equals €885m,and I have a feeling that this is light. Time will tell.

“They are well regulated” made me smile, pity the interviewer didn’t press him on no information, each CU reports to the League monthly using PEARLS, well that what it was when I did it.

He admitted that certain CU’s will fail, how many he couldn’t put a figure on it… interesting times.

Number of points, some of the CUs lending criteria is muck and open to abuse, a lot of the investment advice they have recieved in the past is muck see last bond they invested in. And based on a few of the things Ive heard in the past reported in the news then there is a rude awakening coming down the pipe. E.g. remember the CU in Cork or Limerick on the news for lending someone €100k who only had €100 in savings :open_mouth:
Also I would guess the Gards CU most be undere huge pressure re bad debts based on whats happening with other institutions in the country as 1/ lots of gards involved in property game which has gone tits up 2/retired gards as well 3/ their family members can borrow 4/ I have seen borrowings in relation to some people I know fron this CU and its scary how they managed to get it and it’ll never be paid back. :open_mouth:

Friend of mine is in the Gards, he obtained mortgage approval from the Garda CU for €280k about 4 months ago, he put an offer in on a house monday and the estate agent asked for a copy of his mortgage approval
Off he went to the Garda CU to be told they werent going to lend him the 280 anymore, but could now only offer 230
The house for sale is at 250 so he rang the EA to explain and she said its happening across the board.

What are CUs doing issuing mortgages?

Under the 1997 Credit Union Act they shouldn’t, as the maximum term of a loan should be 5 yrs, but at the end of that term the remaining balance is re-issued under a new “loan”… and on it goes.

Some CU’s do have arrange loans through banks and the member gets 25bps back on interest paid by way of rebate, wonder do revenue know this? as it could effect ones TRS…

There will some amount of shyte from this…

I see from eTenders that Grant Thornton will be paid the guts of €600,000 for their work.
etenders.gov.ie/search/show/Search_View.aspx?id=AUG166796

I’d be able to do it for half that :smiley:

Get your tender in then… :unamused:

Nah… to political for me, report will never see the light of day, 2.3million people, even half that is a lot of votes. Also it should be bourne in mind that an awful lot of local politicians are involved in running of various CU’s.

Allow Grants do their work and we’ll see what comes out if anything.

And anyway my health wouldn’t allow me… so there ya go.

Imagine that… :stuck_out_tongue: