Welsh government announces £1.2m investment in credit unions

The Welsh Government will invest a further £1.2 million in the Welsh credit union sector before March. The funding will support 19 projects, seven of which are national.

These projects include a marketing campaign to boost credit union membership led by North Wales Credit Union, improvements to online accessibility led by Cardiff Credit Union and training for two staff to provide financial education in schools led by Merthyr Tydfil Credit Union.

Mark Lyonette, chief executive of Abcul, the Association of British Credit Unions, says: “Welsh credit unions, like their counterparts across Britain, have seen substantial growth in recent years and Welsh Government investment has played an important role.

“The challenge for credit unions in Wales today is much the same as it is in England and Scotland; to develop a business model which is competitive, and products and services which are attractive to a range of members. This will ensure sustainable credit union services for whole communities.”

Minister for communities and tackling poverty Jeff Cuthbert AM announced the funding; the culmination of a process which began with former minister, Huw Lewis AM, seeking the sector’s proposals for investment last summer.

Mr Cuthbert says: “I want to see credit unions offering a range of services that, as well as attracting middle income earners, assist those on low incomes and in need of financial help and guidance. For example, I want to see credit unions in Wales working towards providing a range of services such as accessible loans, encouraging savings and providing a universal offer of budgeting accounts aimed at helping people cope with new housing benefits arrangements.”

Meanwhile, representatives from the European Network of Credit Unions (ENCU) and World Council of Credit Unions met EU policymakers to discuss how to limit the impact of liquidity rules on credit unions.

The group asked the European Banking Authority (EBA) and the European Commission to consider establishing a credit union-specific liquidity classification under EU Basel III rules, to reflect that credit union deposits are generally “sticky and stable”, even during times of economic stress.

Concerns have been raised by credit unions across Europe that their deposits with banks and building societies are attracting lower yields, with some refusing to accept credit union deposits at all.

According to the group, underpinning this trend is the Basel III classification of credit union deposits as “wholesale”, which assumes they would be withdrawn in periods of stress.

Matt Bland, policy and communications officer at ABCUL explains: “Classification of credit union deposits as wholesale doesn’t reflect the behaviour of these funds, which are stable and don’t flee in times of economic stress, but in recent years have instead increased.

“We’re hopeful that EBA and the EC will be able to resolve this issue so that credit union funds’ classification more accurately reflects reality.”

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