A wave of mergers of credit unions is set to follow after the publication of a report on their future.
The Chairman of the report on the Commission of Credit Unions, Professor Donal McKillop, said he would not give a figure for mergers.
But he said at the end of last year that 51 unions had total realised reserves less than 10% of assets.
Some experts have told RTE News that strict new criteria may result in over 100 unions opting for mergers.
The Commission's report said that the adverse economic conditions have resulted in a decline in credit unions' performance and have made it difficult for some to replenish their reserves.
The purpose of the Commission's report is to help prepare new credit union legislation, which will be published by the end of June.
It also makes recommendations regarding the strengthening of the regulatory framework of credit unions, including more effective governance.
The report stated that of the 403 credit unions that submitted returns, 51 had total realised reserves less than 10% of assets, while 25 could be considered ''seriously undercapitalised''.
But despite the financial crisis and the challenges it poses, average liquidity has remained high and stood at 47.38% in December 2011. The loan-to-asset ratio in the sector was 40.76% in 2011.
The main recommendation of the report is the restructuring of the credit union sector. It said this should be achieved on a voluntary, incentivised and time-bound basis. It advises that credit unions approved for restructuring should be provided with funding - where required and subject to conditions - to ensure they have enough capital and to up-grade systems.
The Commission predicted that a ''significant funding requirement'' will be needed for this, but the exact amount will not be known until the position of the credit unions being restructured is fully assessed.
The report noted that credit unions have an important role to play in financial inclusion and social lending. It also set out a number of ways for credit unions to do more in this area, while at the same time ensuring that this does not create unhealthy risk exposures in the sector.
''While the financial challenges now faced by credit unions are evident, they are not insurmountable but do reinforce a clear need to reform how credit unions are structured, governed and regulated,'' today's report stated.
''A strengthening and revitalised sector can be in a position to pay an increasing role in the retail financial landscape,'' it added.