Irish credit unions call for regulatory changes to be able to lend more mortgages

The statement is a response to a Sunday Independent article by Minister with Responsibility for Credit Unions, Sean Fleming

The Irish League of Credit Unions (ILCU) has issued a statement in which it asks the government to allow credit unions to significantly increase their footprint in the mortgage market.

The statement is a response to a Sunday Independent article by Minister with Responsibility for Credit Unions, Sean Fleming, in which he suggested that “credit unions should fill the gap left by the departures of Ulster Bank and KBC from the Irish market and start lending more mortgages”.

ILCU said the sector was keen to seize this opportunity but noted that credit unions were “currently handcuffed by the restrictive lending limits for mortgages prescribed by the Central Bank of Ireland”. ILCU explained that mortgage and SME lending is limited to a combined maximum of 7.5% of total assets for most credit unions. As such, a credit union with assets of €70m (£58.33m), taking an average mortgage of €350,000 (£291,628), can only offer 15 mortgages under the current limits, exclusive of any SME lending.

ILCU asked Minister Fleming to address the restrictive regulatory lending regime for credit unions.

Commenting on the article, ILCU deputy CEO David Malone said: “The Programme for Government committed to ‘Enable the Credit Union movement to grow as a key provider of community banking in the country’ “. In order for credit unions to become community banks, and to really engage in the mortgage market, the ILCU is asking Minister Fleming to address the imbalance caused by the restrictive regulatory lending regime in his soon to be published review of the policy framework within which Credit Unions operate.

Mr Malone added: “The publication of this policy framework review presents a once in a decade opportunity for the Minister to empower credit unions to realise their full potential in filling the gap left by Ulster Bank and KBC and in doing so, offering a community-based alternative to the remaining banks to the Irish public. The ILCU is ready and willing to constructively engage with Minister Fleming and his officials in achieving this aim.”

Irish credit unions have also recently asked for reform of regulatory capital requirements for credit unions.

In a 2021 paper by the Credit Union CEO Forum, credit union leaders argued that these requirements were “excessive and unjustified relative to the risk profile of the Irish credit union balance sheet, international credit union requirements and the requirements on competing financial institutions”.

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