The Irish League of Credit Unions has said there is no need for members to worry about the safety or security of their 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 €1.4 billion in reserve.

Mr Brennan was speaking following the announcement from the Financial Regulator that the financial stability of Mitchelstown Credit Union in County Cork was under threat.

The credit union has been told to cease business lending and limit its personal lending. The credit union has said, however, that all money lodged with it is safe.

The Financial Regulator's Registrar of Credit Unions, Brendan Logue, wrote to the Mitchelstown Credit Union two weeks ago to raise his concerns about the credit union's 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 the fact 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.

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.

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.

All credit union savings up to a maximum of €100,000 are guaranteed by the Government's Guarantee Scheme, and the Irish League of Credit Unions also operates a separate Savings Protection Scheme.

The Mitchelstown Credit Union said it was solvent and that all money lodged with it was safe. In a statement, it said that 'in the current economic climate' it is 'now focusing on the personal needs of its members'.

The Mitchelstown Credit Union also said every effort was being made to appoint an appropriate manager.