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Credit unions – the cornerstone of local communities

Jimmy Johnstone, president, ILCU.

Jimmy Johnstone, president, ILCU.

In recent weeks no doubt many credit union members will have seen newspaper coverage or heard local radio debate about the future course for our movement and the support it offers people in the local community.

Much of this coverage has been prompted by events which are largely technical in nature and will have little impact on members as they go about their day to day business with their local credit union. However, as the body which represents credit unions in Ireland, we have also been keenly aware of the uncertainty which such coverage can create.

What is happening is that after two-years of dealing with the fall-out of the crisis in our banks, the Government is now ensuring that credit unions have enhanced viability. This is being done to honour a commitment that was entered into with the IMF and the European Union as part of Ireland’s bail out.

You would be forgiven for coming away with the impression from some of the recent media coverage that the Government is about to pump €1 billion into credit unions in an effort to keep them afloat, whereas in fact nothing could be further from the truth.

I would like to take this opportunity to set the record straight on a number of issues and hopefully clear up any confusion that may have arisen. No money is being put into credit unions this year, a firm sign that the Government believes there is no impending crisis in our movement. This is in stark contrast to the first aid action that was required for our banks.

It is true that the Government is offering a fund to safeguard those individual credit unions that may face difficulties and it will be used on a case by case basis. This commitment is welcome as it underlines the belief of the authorities that our movement continues to have a central role in Ireland’s future financial landscape.

To members of credit unions there are a number of points I want to be absolutely clear on: Credit unions will not close, on the contrary we will be in a much stronger position as a result of the Government’s action. Savings are 100 per cent safe, and are guaranteed to up to €100,000. Credit unions belong to their members, this is central to our movement and will not change. We are not a bank – and will never lose our community focus.

Financial difficulties

Having said that, we do not exist in a bubble and outside factors do impact on us. It is a cliché to say we live in challenging times, and of course our movement is not immune from the financial difficulties which face our members every day.

In response to the crisis facing our country the Credit Union movement has acted prudently. In terms of dividends for our members we have to see what the year brings in totality before the delivery of a dividend can be decided upon. The dividend issue will be decided on by each credit union board which will take whatever is in the best interests of all of the members into account. Credit unions were not established solely on the basis of delivering a dividend – it is more important that credit unions supply affordable credit and a secure environment for savings.

On loans too we have to be cautious. Credit unions are dealing with many new regulations and requirements at the moment. The credit union will continue to assess all loan applications in a prudent manner in the best interest of members and the credit union as a whole.

As Ireland emerges from its current difficulties we will be there to support communities and people, like we have been for five decades.

In the coming weeks I look forward to marking the 50th anniversary of Irish Credit Unions, it will be a particular honour for me to stand side by side with John Hume, one of the founders of our movement and a man who has shaped a modern peaceful Ireland.

We will be looking back through the archives and seeing how our movement has not just grown, but also evolved to meet the challenges of the times. We have always shown ourselves to be robust and able to join communities in facing recession, unemployment, and in the case of John’s work in Northern Ireland the threat of violence.

Just like when we faced those challenges in the past, our movement now is strong, our core principles and aims remain, we are owned by the communities which we serve – and whatever technical changes may occur, that will never change.

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