The High Court has appointed a special manager to Newbridge Credit Union following an application by the Central Bank.
The Central Bank said the action has been taken to protect members' savings and to allow the credit union to operate as normal. The special manager will oversee the day-to-day management of the credit union.
The bank has reassured members that they do not need to take any action and can continue to do business as normal with the credit union. It added that Newbridge Credit Union's offices remain open and all services, including deposit and loan facilities, are available.
''We have taken this action to strengthen NCU, protect members' funds and ensure that NCU can continue to operate effectively, providing financial services to the local community,'' commented the Registrar of Credit Unions, James O'Brien.
The High Court heard that the application was being made under the Central Bank Credit Institutions Resolution Act, which allows a special manager be installed to run the entire operations of a credit union when it was feared regulatory requirements were not being met.
This is the first such action to be initiated under this legislation against a Credit Union. Newbridge Credit Union has 14 days to appeal the decision to the High Court.
The manager, from the Ernst & Young company, is to review the Newbridge Credit Union's loanbook as well as funding and arrears at Newbridge Credit Union. But the court emphasised "it will be business as usual".
Senior counsel Paul Gallagher made the ex-parte application on behalf of the Central Bank, saying the act allowed the order be granted where an institution failed, or was likely to fail, to meet regulatory requirements.
Mr Justice Nicholas Kearns heard from correspondence between the board of Newbridge Credit Union and the regulatory authorities. The board argued it was "unreasonable" for the Central Bank to proceed in way it planned.
But the Central Bank argued there was an urgency involved in seeking the order, to secure the Credit Union's financial position.
The court heard the Credit Union's 2011 AGM had been postponed and there were concerns about a possible regulatory breach of minimum reserves being held at Newbridge.
Mr Justice Nicholas Kearns granted the order, which takes immediate effect.
Noonan says CU movement needs restructuring
Finance Minister Michael Noonan said he fully supports the intervention taken by the Central Bank on Newbridge Credit Union and was consulted on the intervention, as is required under the Central Bank and Credit Institutions (Resolution) Act 2011.
"The Government recognises the important role of credit unions as a volunteer co-operative movement and the distinction between them and other types of financial institutions,'' he said in a statement
But he added that there is a need for restructuring in the credit union sector as some credit unions have difficulties. He added that the Government will ensure all necessary measures are taken to ensure a stable credit union sector.
''The appointment of a Special Manager is a necessary measure and was taken in the best interests of Newbridge credit union members. There is no effect on the members or staff of Newbridge Credit Union and the Credit Union will continue to operate as normal,'' he added.
He also said he would like to reassure credit union members in Newbridge and in the wider credit union movement that their savings are secure.
