The long-term well-being of Irish Credit Unions – turning aspiration into reality

• Resilience, strength and importance of the sector recognised
• Central Bank remains committed to engaging with the sector to achieve long-term well-being
• Sector urged to focus energy on pressing business challenges
• Called for greater leadership, a clearer vision to lead change and for well-thought through, credible and implementable proposals

Ed Sibley, Director of Credit Institutions Supervision, addressed the Irish League of Credit Unions today (22 April 2017) at its AGM in Citywest.  His comments focused on his perspectives on the Credit Union sector, the critical importance of business model development for the sector, and on regulatory engagement and requirements.

Mr Sibley began by recognising the importance of the sector and praising the work that had been done to reduce risks across the sector, highlighting the significant restructuring completed. Among other positive developments, he referenced that loan arrears are falling and that progress has been made in meeting regulatory requirements, albeit that more needed to be done.

He emphasised that Credit Unions need to continue to develop and enhance their business models to secure the well-being of the sector into the long-term.  He highlighted that this comes at a time when all credit institutions are adapting to changing competitive dynamics driven by digitisation, new business models, new entrants, disaggregation of traditional delivery systems and changing consumer expectations.  He noted that greater leadership and a clearer shared vision was required to deliver the necessary development.

He also urged Credit Unions, collectively and individually, to focus on real and pressing business challenges, which are common across the sector, and what can be done to meet them, rather than being distracted by over-emphasising the regulatory constraints.

In relation to investment in social housing, Mr Sibley stated that the Central Bank will shortly be consulting on changes to eligible investments for Credit Unions, including social housing. He also noted that the Central Bank was engaging with sector representatives on longer term lending (including mortgages). He said that no credible, well-thought through cross sector proposal had been submitted to the Central Bank for its consideration on this topic to date. Changes to the asset side of Credit Unions’ balance sheets (loans and investments) need to accommodate associated balance sheet transformation and risks, addressing funding, asset-liability matching and liquidity risks, which had been lacking to date.

Mr Sibley concluded by saying “Credit Unions are an important part of the Irish financial sector and we share a common objective of ensuring sound Credit Unions that protect members’ funds’ and can thrive into the future, serving communities, households and businesses in the best spirit of the Credit Union movement.”

Read the speech:

The Long-term well-being of Irish Credit Unions – Turning Aspiration into Reality - Ed Sibley, Director of Credit Institutions Supervision

Notes

• Ed Sibley was appointed Director of Credit Institutions Supervision in April 2016. He is responsible for overseeing the Central Bank's supervisory work for all banks and credit unions operating in Ireland and is the Central Bank's Member of the Supervisory Board of the Single Supervisory Mechanism (SSM).