Minister Donohoe signs stabilisation regulations into law to provide additional support for viable Credit Unions
The Minister for Finance and Public Expenditure & Reform, Paschal Donohoe T.D., has signed into law the Credit Union Fund (Stabilisation) Levy regulations on 5 December 2017.
Under the Regulations credit unions will be required to pay a stabilisation levy contribution in 2018. This stabilisation levy is the fourth in a series of annual levies that will be used to build up a Stabilisation Fund for credit unions.
The introduction of the Stabilisation scheme was one of the recommendations of the Commission on Credit Unions which also recommended that the scheme be funded by mandatory contributions from credit unions
The target size for the Stabilisation Fund is €30 million to be built up over ten years. The size of the Fund and the length of time it will take to build it up will be reviewed every three years. On the basis of the results of these reviews any necessary adjustments can be made to the target size of the Fund and the number of years in which it should be built up.
The first of these reviews took place in October 2017 prior to the introduction of these Regulations. The outcome of the review was to reduce the rate of the levy (from 0.022% to 0.017%) while still meeting the original target of €30 million over a ten year period due to growth in assets for the sector. The Minister for Finance has committed to a review of the levy again in three years before the introduction of the 2021 levy. Officials from the Department will discuss the terms and conditions with the European Commission.
Stabilisation support is available to all credit unions with a reserve ratio equal to or greater than 7.5% of the credit union’s total assets and less than 10% and where the Central Bank assesses the credit union as viable. Stabilisation support will be provided to address short-term problems at credit unions that are viable but undercapitalised.
The Stabilisation Scheme will operate in two ways. Where a credit union has total assets less than €100 million, viability is assessed by the Central Bank before the Minister can consider granting stabilisation support. Where a credit union has total assets greater than €100 million, viability is assessed by the Central Bank and European Commission approval has also to be obtained, before the Minister can consider granting stabilisation support.
This support may include the provision of technical and financial advice and the provision of financial support to a credit union.
The Minister has made the regulations under Section 59(3) of the Credit Union and Co-operation with Overseas Regulators Act 2012.
The Credit Union Fund (Stabilisation) Levy Regulations, along with a Q&A and the first three year review of the levy carried out in October 2017 are published on the Department of Finance website.
21st December, 2017
Aidan Murphy, Press Officer, Department of Finance – 085 886 6667