Fermoy Credit Union ‘burnt’ by Anglo liquidation
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Fermoy Credit Union is one of a number of credit unions around the country to be ‘burnt’ by the liquidation of the former Anglo Irish Bank. The credit union had €1.68million invested in a deposit product with the former bank. It’s looking unlikely they’ll get the money back. The funds on deposit were due to be repaid this September to depositors.
Asked by the Avondhu this week if the loss of €1.68million would destabilise Fermoy Credit Union, financial controller Marvin Board assured us that it wouldn’t. Confirming that the credit union had a product with the former Ango bank, he said they’d had no official confirmation as yet on any loss and are awaiting further information. They have however, examined their own books and determined that even if they suffered the total loss of the €1.68million, they would remain solvent under the financial regulator’s guidelines.
When asked if customers deposits are at risk, the financial controller said “absolutely not”. While they are confident they will remain solvent, he said, in any event members’ deposits are covered by the Government’s deposit guarantee scheme.
He couldn’t say for certain if dividends this year will be affected if they suffer the loss of the money, but he advised: “Our strategy would be to try to pay a dividend this year.”
While conceding that the loss of such a large amount of money would hamper the credit union’s surplus, he assured that Fermoy Credit Union could sustain the loss. Mr Board also stressed that the product they invested in was capital guaranteed, a product with a minimum guaranteed return on it and not in any way speculative. “It was secure,” he said. The investment was made in 2005 and was tied in for an eight-year term.
The matter has been discussed by the Government with Taoiseach Enda Kenny saying in the Dail this week that it’s up to the liquidator to decide what to do with the €12million invested by credit unions in the former bank. He was accused by Fianna Fail leader Michéal Martin of not being aware of the implications for credit unions of the liquidation of Anglo. The IBRC liquidator, Kieran Wallace of KMPG, meanwhile is understood to have informed credit unions that they are considered unsecured creditors. As such they stand little chance of recouping any of the invested money.
The credit unions weren’t in a position to move their money – they were informed two years ago that they were in a special structured deposit bond scheme which had to last the full eight years. They were reassured at that time that the money was protected by the state banking guarantee. The Department of Finance has since said however that the credit union money was invested in an equity linked bond with no guarantee they’d get it back.
Labour Minister Sean Sherlock confirmed to The Avondhu that he met late last week with the board of Fermoy Credit Union at which they outlined their predicament. He says he has since written to Finance Minister Michael Noonan and spoken with a senior official in the Department of Finance and is awaiting a formal response to a submission he made on behalf of Fermoy Credit Union. “There does need to be some clarity provided,” he remarked.
Meanwhile, the manager of Mitchelstown Credit Union was happy to confirm to The Avondhu that the credit union has no exposure to Anglo and that all savings are ‘safe and secure’ within the Mitchelstown branch.
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