Newbridge Credit Union, which was taken over by Permanent TSB on Sunday night, was just days away from liquidation with a total of €20 million of members’ savings withdrawn in the 14 week period since July 27 last, at an average of €76,000 per day.
The €54 million transfer to Permanent TSB, paid for by the tax payer,was described as ‘ultimately the only viable solution available’, other than immediate liquidation of the credit union, by the Central Bank after a proposed amalgamation with Naas CU posed too much of a risk for the Naas Board.
It has also emerged that ‘hundreds of loans’ of up to €3 million were granted by NCU, in what has been described as ‘bad lending’ practices, by the Registrar of Credit Unions.
The Registrar of Credit Unions, Sharon Donnery, who spoke to the Leinster Leader in the wake of the PTSB takeover, said the original plan was to go to the High Court on Monday, however fears were rife that a run on the credit union would mean the transfer would not have gone ahead.
According to the Central Bank, NCU was just €2.2 million away or 29 days away from the Liquidation Trigger Point, or total funds currently available at NCU of €5.8 million. However it predicted that the trigger point could be reached in just four days if a run on the credit union was anything like the €536,609 taken out per day in the week of July 27 to August 2 2013, when the news first emerged of a possible merger with Naas Credit Union.
“There will be no AGM for members as it is no longer a credit union, however members savings are secure”, she said. “Permanent TSB will retain the premises for the foreseeable future and they are talking to the staff at NCU today (Monday). I understand members will be disappointed and frustrated. Newbridge got into difficulty by bad lending and a large building which was over valued on the balance sheet. The Central Bank has spent the last two years looking for another credit union to amalgamate but nobody is now willing to do so.”
Meanwhile full disclosure of various lending practices and developments since the appointment of the special manger in NCU has been published by the Central Bank in an online resolution report.
“The biggest loan granted by NCU was €3.2 million,” said the Registrar, who added that there were ‘hundreds’ of loans of a similar level granted by NCU.
The report indicates that (as reported by NCU at 31 December 2009), the credit union granted a loan of €3.2 million, which exceeded 1.5 percent of the total assets at the date of loan, and was in breach of regulations at the time.
The report also states that a balance of €2.8 million was still outstanding on the loan on September, 30, 2013.
It also states that at the close of business on Saturday, July 27, 2013 NCU held a total members savings of €90.7 million and liquidity resources of €11 million. In the week following
NCU’s members’ savings base deteriorated rapidly and, at close of business on Saturday 3 August 2013, NCU held a total members savings of €87.9 million, a reduction of €2.9 million or a 3.2 per cent decline over a period of seven days.
A statement from PTSB said it is business as usual at Newbridge Credit Union and that former NCU members, now PTSB customers will receive a letter from the retail bank outlining their position in the near future. Meanwhile NCU staff have now become staff of the PTSB group.
Four banks in total were approached by the Central Bank, AIB, Bank of Ireland, PTSB and Ulster Bank to take over the assets (excluding the premises) and liabilities of NCU.
All Newbridge Credit Union members accounts will now become deposit accounts with Permanent TSB and members will maintain all their savings however bank charges may now apply on all acounts.
The retail bank plans to write to all 37,000 members to offer them an interest rate on those deposits in place of a dividend, which is the current entitlement for members. Director of PTSB Niall O’Grady said ‘it is not the banks intention to merge NCU with PTSB’.