European Commission Approves Sixth Prolongation of Irish Credit Union Restructuring Scheme
The European Commission has found the prolongation until 30 April 2018 of an Irish scheme aimed at restructuring credit unions, to be in line with EU state aid rules, and in particular the 2013 Banking Communication. The objective of the scheme is to underpin the stability and long-term viability of credit unions and the credit union sector in Ireland at large.
Restructuring involves merging weaker and stronger credit unions, providing, if necessary, a capital injection to make up any shortfall in the capital reserve requirements of the merged credit union. Stabilisation involves assisting fundamentally viable credit unions that have temporarily slipped below the regulatory reserve requirements.
The Commission found that the measure ensures that the beneficiaries become viable in the long-term through restructuring or merging with sound credit unions, and that they contribute to the cost of restructuring. Moreover, the impact on competition is limited because credit unions are small and do business only with members.
The Commission initially authorised the scheme in October 2014. It was subsequently prolonged five times, the last time in May 2017. Until now, the Irish authorities have managed to restructure credit unions without granting any aid under this scheme.