The Central Bank has made an application to the High Court to have a provisional liquidator appointed to Drumcondra and District Credit Union.
Stephen Tennant and Nicholas O'Dwyer of Grant Thornton have been appointed as joint provisional liquidators to the Dublin-based credit union.
The Central Bank stressed that the move will not impact on members' savings in any other credit union.
It said it took the action to protect members' savings at Drumcondra and District Credit Union and to avoid a "disorderly failure" of the credit union. Drumcondra Credit Union has about 5,000 members.
The Central Bank said it has been engaging with the credit union since 2016 to address its long standing challenges connected with its financial viability.
But despite efforts by the credit union to overcome those challenges through a voluntary transfer of engagements, the Central Bank said that all potential solutions were ultimately unsuccessful.
Today's action is not related to the exceptional circumstances of Covid-19, the Central Bank also noted.
Following the appointment of the joint provisional liquidators, the Deposit Guarantee Scheme has been invoked for members of the Drumcondra and District Credit Union.
Members will receive compensation in respect of their eligible deposits up to €100,000 per person.
The Central Bank said that members do not have to take any action themselves as compensation payments will automatically be issued by cheque to all depositors at the credit union.
These payments will be made as early as possible within the statutory deadline of 15 working days to members, it added.
The Central Bank said it is aware that there is a demand for the services of a credit union in the community and is committed to seeking to ensure that credit union services are available within the local area.
This is not the first time the Central Bank has activated its Deposit Guarantee Scheme. It was activated as part of the liquidation of IBRC in February 2013, Berehaven Credit Union in 2014, Rush Credit Union in 2016 and Charleville Credit Union in 2017.
The Irish League of Credit Unions said the appointment of provisional liquidators to Drumcondra and District Credit Union was disappointing for its members.
It said the board of directors of Drumcondra Credit Union had been working with the ILCU for some time to bring about a transfer of Drumcondra Credit Union to another credit union on a voluntary basis. However, it said this was found not to be feasible.
"The ILCU is conscious of the demand for the services of a credit union in the local area and it will be exploring how this can be delivered for members in the future," it said.
"The ILCU, in its capacity as the largest trade and representative organisation of credit unions on the island of Ireland, will explore all possibilities in this regard," it added.
The Irish League of Credit Unions said that overall, the credit union movement is strong and extremely well capitalised.