Dáil Éireann - Volume 675 - 18 February, 2009
Written Answers. - Financial Institutions.
Deputy Brian O’Shea Deputy Brian O’Shea
Deputy Brian O’Shea asked the Minister for Finance his views on whether bad debts relating to property lending at credit unions could be on the rise; if he will provide information as to the level of asset impairments at Irish credit unions; if he has held meetings with represen tatives from the credit union sector with respect to this issue in the past three months; and if he will make a statement on the matter. [6346/09]
Deputy Brian Lenihan Deputy Brian Lenihan
Deputy Brian Lenihan: The Registrar of Credit Unions is responsible for the regulation and supervision of credit unions under the Credit Union Act, 1997. The Registrar’s statutory role under the Act relates to the supervision and oversight of the financial position and activities of credit unions on an ongoing basis. The Registrar reports regularly to the Regulatory Authority in order to ensure that there is an early identification and response to any significant issues relating to the credit union movement or any individual credit union.
As the Deputy will recognise the current economic downturn is adversely affecting the loan books of all financial institutions including credit unions. It is, however, important to make the point that the credit union movement has not been a significant participant in property lending in the economy and the movement, is therefore, not in overall terms significantly exposed to this type of lending. In that context the Registrar of Credit Unions does not collect aggregate data on debts due to credit unions specifically related to property lending.
My Department has, however, been advised by the Registrar of Credit Unions that he is aware from his engagement with some individual credit unions that there is some exposure in this area. In addition, while a proportion of this lending has experienced impairments it is probable that further impairments will occur in this regard during 2009 and beyond on account of the deterioration in the economic environment overall. More generally, the Registrar has informed my Department that loan arrears in credit unions have increased in the year to end-2008. Information extracted from the prudential returns for December 2008 indicates that provision for bad debt was €284 million. Bad debt provisions at 3.9% of total loans at end-2008 show an increase of 0.3% on the December 2007 figure.
The Deputy may wish to note that the Registrar of Credit Unions liaises with my Department on a regular basis in relation to the legislative and policy framework for credit unions. In addition, my Department meets separately with the Credit Union representative bodies on a regular basis. I have not met personally with these representatives in the last three months.
Dáil Éireann 675 Written Answers. Financial Institutions.