One of Ireland’s biggest credit unions has been told by the Financial Regulator that its financial stability is under threat.
The Mitchelstown Credit Union has been ordered to stop all business lending and it must limit its personal lending to members to a strict amount each month as calculated by the Financial Regulator.
The regulator's Registrar of Credit Unions, Brendan Logue, wrote to the Mitchelstown Credit Union two weeks ago to raise his concerns about its performance.
He identified a number of issues which he believed threatened the financial stability of the credit union, which has 17,000 members.
The registrar highlighted that four of the top five loans at the credit union were in arrears by last September, and that significant losses have been made on investments.
A spokesperson for the Financial Regulator said staff are currently working with the board of management on a programme of remedial action to stabilise the credit union's financial matters.
The Mitchelstown Credit Union confirmed that it is solvent and that all savings lodged with it are safe.
In a statement, it says that 'in the current economic climate' it is 'now focusing on the personal needs of its members'.
The Irish League of Credit Unions has said there is no need for members to worry about the safety or security of savings and that guarantees are well established.
The League's Chief Executive, Ciaran Brennan, also said that on top of these, the Credit Union movement had €1.4bn in reserve.
All credit union savings up to a maximum of €100,000 are guaranteed by the Government's guarantee scheme.
