The Director of Credit Institution Supervision at the Central Bank has said there had been a history of issues at Newbridge Credit Union which could be summarised as "atypical lending".
Fiona Muldoon said poor lending decisions had been made by Newbridge Credit Union. She also queried its investment in a very large building.
Her comments come after Newbridge Credit Union was taken over by Permanent TSB Bank last night.
The transfer of the financially troubled credit union to the state owned bank was approved last night by the High Court, following an application by the Central Bank.
The Central Bank - which regulates the credit union sector - said the move was necessary to protect the savings of members of Newbridge Credit Union, which is open for business as usual today.
Permanent TSB said the transfer will bring clarity and stability to the members of Newbridge Credit Union as their accounts are now being managed and backed by one of "Ireland's major retail banks".
"Our role is to stabilise the credit union and ensure that this special relationship with the local community is protected," commented the bank's chief executive Jeremy Masding.
"We are bringing stability and management expertise to the significant financial challenges facing Newbridge Credit Union. We believe that the terms of the transfer will protect Permanent TSB bank from any financial risk in the transaction and this will enable us to focus our resources entirely on managing the Credit Union's deposits and loan book," he added.
High Court told PTSB move only viable solution
A Sunday night sitting of the High Court was told that the only viable solution to Newbridge Credit Union's problems was for it to be taken over by Permanent TSB.
Otherwise there would have had to be an immediate liquidation of the credit union, under which members would not have had access to their money and some - such as schools who kept deposits there - risked a loss of funds.
The transfer order means no disruption for customers, and the credit union opened its doors as usual this morning. The only difference is that customer's accounts are now with PTSB, not Newbridge Credit Union.
PTSB will receive €53m as part of the transaction to make good losses in Newbridge Credit Union.
The money will come from a state fund set up to deal with financial problems in the credit union sector.
The Central Bank has been addressing problems at Newbridge Credit Union since 2008, and in January 2012 the High Court appointed a special manager to run the institution.
An attempted merger with Naas Credit Union was abandoned two weeks ago, leading to the takeover by PTSB. The credit union has about 32,000 deposit accounts and 7,000 loan accounts.
Permanent TSB said today that it will honour all deposits held with Newbridge Credit union, adding that in line with credit union policy, it has committed to pay a dividend to deposit holders in recognition of their support in recent months for their credit union.
Credit unions 'safe, strong and secure'
The chief executive of the Irish League of Credit Unions has reassured members that credit unions are safe, strong and secure.
Mr Brennan told RTÉ's Morning Ireland that he could not comment specifically on Newbridge Credit Union as it is not a member of the IBCU.
However, he said he was confident that the rest of the movement was in a good position and the Government and the Central Bank had confidence in it.
He also reassured members that savings up to €100,000 are protected by the deposit guarantee scheme.
"Credit unions are safe, strong, secure. We are very clear on that and we are backed in that by the Central Bank and the Minister for Finance," Mr Brennan said.
Credit unions facing challenging environment
The Central Bank's Fiona Muldoon said credit unions were facing a very challenging environment with peoples' lower earnings, which was having an impact on their ability to repay loans.
She said that there were specific issues around Newbridge which had led to its problems.
However, she said she could not say that Newbridge would be the only credit union in difficulty, but neither could she say there were widespread or endemic problems amongst credit unions.
Ms Muldoon added that the Central Bank would continue to work with all credit unions in the interests of ensuring the health of the sector and protecting members' savings.
She said that the Central Bank was working with the movement to ensure that community lending principals were adhered to and that they did not stray into "high risk banking style lending".
She would not be drawn on the scale of the exposure of problems in the broader credit union movement.
Ms Muldoon said Newbridge was a circumstance where the Central Bank had used its powers carefully.
"I think we will be continuing to work through and look at closely all of the credit unions in order to make sure the sector is strong and well regulated and to make sure members savings are protected. I don't think at this point we could say that Newbridge is the only one, nor do I think we could say that it is endemic and widespread throughout the sector", she stated.