Minister of State with responsibility for financial services Seán Fleming said the planned credit unions legislation he is working on contains “no silver bullet” for a movement weighed down by excess deposits and muted lending, and that it is mainly up to the sector to help itself.
Mr Fleming said he hoped to pitch the heads of a Bill next month to Cabinet, aimed at enabling credit unions to co-lend and collaborate more. It follows up on a programme for government commitment to review the wider legislative framework around the sector. “There is no legislative silver bullet for the credit union movement. All we can do is pass legislation to enable them to lend. The only silver bullet is to lend more and that’s up to members of the movement themselves,” Mr Fleming said.
The average credit union in the sector in the Republic had just €27 out on loan for every €100 of assets as of September, close to historically low levels, according to figures published late last year by theThe ratio is down from 49 per cent in 2007, and ranks among the lowest across credit union movements worldwide. The optimal loan-to-assets ratio is widely viewed to be about 50 per cent.
“Some credit unions have ratios of as high as 64 per cent, but others are as low as 14 per cent,” Mr Fleming said.