First it was the banks. Now it's the credit unions. by Jill Kerby
THE largest credit union in the state has been saved at a cost of €54 million. Up to 120 other credit unions are in some form of difficulty, 20 unable to meet their capital solvency requirements, claims the government, (that is they have insufficient reserves to meet their liabilities) while another 100 are currently being 'examined' by officials of the Central Bank (whatever that means, we were not told.)
Meanwhile, for ACC Bank and Danske Bank customers, the search is now on for a new bank and new savings and credit facilities. Danske Bank say it is business as usual and customers will be informed shortly about how their accounts and bank facilities will be with-drawn over the next six months.
Mortgage and personal loans will continue to be paid even after Danske Bank retail business is shut down, but current and savings account facilities like direct debit and standing order instructions, credit and debit card facilities, overdrafts, internet banking, etc. will be phased out and customers will need to transfer these to other institutions.
Danske Bank customers with overdraft and credit card balances will be particularly interested to find out if and how these balances will be treated should a new bank decline to extend them the same credit facility. It has been suggested that in such cases, existing overdraft and credit card debt will be converted to term loans and repaid to Danske Bank.
The other high street banks – AIB, Bank of Ireland, PTSB, Ulster Bank and KBC Bank - all offer the full range of savings, loans and transaction services including on-line banking and are issuing transfer packs to prospective Danske Bank customers.
Free banking is available to PTSB customers who keep €1,500 in their current account at all times; KBC Bank require €2,000 in the account (plus a fixed fee of €24 per annum). Bank of Ireland and Ulster Bank require €3,000, AIB, €2,500.
Their charges and monthly or quarterly charges do differ however and these can be compared, as well as the interest they pay or charge on savings and loans accounts at comparison sites on the National Consumer Agency website, www.nca.ie and at www.bonkers.ie and in the Best Buy money tables in some newspapers.
Make sure to check out An Post's free banking services. It offers a free bill payment service that can be accessed at anytime on-line via their excellent internet site www.mybills.ie or at post offices and even payzones in participating local shops.
Danske Bank (for now) and AIB customers have lodgement/withdrawal facilities at the post office, but An Post does not offer credit cards or loans.
Credit unions, despite the Newbridge setback, have just been given permission by the Central Bank to provide electronic credit transfers. The participating CUs will start rolling out this service for wages and social welfare payments(like pensions) to be paid directly into members' accounts. Later they will offer direct debt, standing orders, on-line banking (like money transfers) and eventually debit cards. Banking services have historically been free at the credit unions.
Everyone should be concerned about the solvency and security of their banks and credit unions. The €100,000 deposit guarantee is in place and should be adhered to, despite the fact that 100% of deposits were covered at Newbridge (15members collectively had €1.1 million in excess of the guarantee limit in their accounts.) The Central Bank is refusing to make public the list of 20 credit unions unable to meet solvency ratios, although the bailout costs would amount to just €11million, suggesting these are very small CU's. Politicians say there is a risk of a 'bank run' if the list was published.
Nor will they identify or explain why the other 100 CUs are under examination. Existing members (or prospective new members) should therefore make it their business to find out if their CU is on the Central Bank's lists and they should be asking question like:
• What share dividend is being paid and if none is, why not?
• What lending criteria is now in place? Are you lending to mortgage holders, to people with bank overdrafts or credit card balances? What about to couples where a spouse/partner is unemployed?
• What is the loan to debt ratio in this CU?
• Are deposits increasing or decreasing in value?
• Are you actively seeking a merger with other nearby credit unions?
Finally, Newbridge Credit Union members business has been transferred to the local PTSB branch have been told that all the terms and conditions of their CU accounts will not change.
They may want to consider carefully what this means: yes, the same interest rate on loans will apply (and the loan will be insured) but PTSB itself is offering an easy access account that pays 2.25% gross on sums up to €50,000 and 2.5% interest over 18 months on minimum sums of €10,000.
Loyalty is all very well, but leaving money in any institution that pays no interest whatsoever benefits no one but the bank.#
Versions of this article also appeared in papers including The Tuam Herald and The Donegal Democrat