The Minister for Finance has announced changes which will reduce the amount of money credit unions will have to pay into two funds set up to deal with any financial difficulties in the sector.

The Credit Institution Resolution Levy for 2021 will be reduced to 0.0259% of assets, meaning a total of around €5 million will be paid, while the Credit Union Stabilisation Levy will be cut to 0.0015544% of assets, a total of around €300,000.

Overall, this will lead to the amount being paid by credit unions into the associated resolution and stabilisation funds falling by almost half compared with the €12 million paid last year.

ILCU welcomes cut

The Irish League of Credit Unions had been pressing for a reduction and welcomed the announcement. “This is a significant cost saving for credit unions which will go some way to alleviating the impact of the COVID-19 pandemic on credit union balance sheets,” said chief executive Ed Farrell.

Minister Paschal Donohue (pictured) said he believed the new rates were appropriate in the context of the current environment for credit unions.

His decision comes after consultation with the sector itself, the Central Bank and the Credit Union Advisory Committee. The Department of Finance said the two schemes remained “well-funded safety nets” for credit unions and their members.

€65 million target

The Central Bank and Credit Institutions (Resolution) Act 2011 established the resolution fund, which is run by the Central Bank and acts as a safety net for credit unions and their members in the event of a credit union's falling into financial difficulties.

The department has set a target of €65 million for this fund by 2025.

The stabilisation levy and fund are covered by section 59(3) of the Credit Union and Co-Operation with Overseas Regulators Act.