Minister of State with responsibility for Financial Services, Credit Unions, and Insurance Robert Troy, TD, addressing the Irish League of Credit Unions.

New credit union lending limits come into effect

Minister of State with responsibility for Financial Services, Credit Unions, and Insurance Robert Troy, TD, has welcomed changes to the Central Bank of Ireland regulatory lending limits to the credit union lending framework.

The Central Bank has brought into effect a set of regulatory changes which will increase the home and business lending capacity of credit unions by €6.6 billion.

The key changes are:

• Increasing the lending limit for home loans to 30% of total assets;

• Increasing the lending limit for business loans to 15% of total assets;

• Decoupling the concentration limits for home and business lending; and

• Removing the need for a business plan for business loans of more than €25,000.

Previously, credit unions could lend a combined 15% of total assets in either home or business lending, a maximum of just over €3 billion.

Based on total assets of €22.05 billion, the sector now has the capacity to advance up to €6.6 billion in home loans and €3.3 billion in business loans. That reflects the competence and capability of credit unions, while giving them the space to compete more effectively and offer choice to consumers in the mortgage and SME markets.

Minister Troy said: “The new framework will allow credit unions to expand and diversify their loan books and provide more of the services their members need. The changes coming into effect today will help to diversify the Irish lending market. Allowing credit unions to increase their home and business lending will help to promote competition and deliver better outcomes for consumers.

“Credit unions have a unique national footprint right around the country, and access to community based financial services continues to be hugely important. That presence makes them ideally placed to offer choice and access to financial products for people across the country.”