# Progressive Credit Union reduces cap on savings to €15,000



## ForceMajeure (5 Dec 2020)

I received a letter this week from a Progressive Credit Union (north Dublin) saying there is a new Maximum Savings Balance of €15,000!

This is effective immediately (1st December): savings >€15k should be reduced by 8th December to below the limit, and any incoming standing orders that might create an excess will be rejected and returned to members.

I have a standing order of €100pcm so thst I could save towards changing my car without taking on too much debt, and last year when I got some tax back I lobbed it into the CU so I’d have my 2021 holiday money set aside. I probably have about €20k there now.

Obviously a savings glut is creating a surplus but €15k seems to me a very low threshold.


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## MrEarl (6 Dec 2020)

They'll have bank accounts with significant sums in them, that may now be attracting a negative interest rate - so I assume that they've done their sums and concluded how much each member can hold, without costing them money.

Is looking like we'll be remaining in a negative interest rate environment for the next few years, so we'll all have to change how we save, I suppose.

If you've a homeloan, or if you are not maxing out your pension contributions already, consider putting something extra into one, or both, of those. If you don't fancy either of those options, then it's off to one of the Banks, or buy Prize Bonds, perhaps.


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## Brendan Burgess (6 Dec 2020)

ForceMajeure said:


> This is effective immediately (1st December): savings >€15k should be reduced by 8th December to below the limit




While the policy is absolutely correct for the reasons mentioned by Mr Earl, that does seem very short notice. 

While most customers would have bank accounts to lodge the surplus in, some wouldn't. 

Not sure why they did not introduce it gradually. 

Stage 1 - no more deposits if accounts are over €15k 

Stage 2 - One month to reduce balances to €50k (Unless they have already done this?) 

Stage 3  Two months to reduce balances to €15k.

What are they going to do about customers who take no action? 

Brendan


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## RedOnion (6 Dec 2020)

The zero / negative interest rates appears to be only secondary in this case, which also explains why there is no lead in time to the changes:

"Why is Progressive Credit Union limiting/imposing a savings cap?
In November 2020, the Board of Progressive Credit Union took the difficult decision to limit savings to €15,000 per member account. This decision resulted from a significant increase in  the value of savings deposits made at the credit union.* This increase in member savings has  
had implications on the credit union’s regulatory reserve requirements*, as set out by the Central Bank of Ireland, which is a minimum of 10% of total assets."


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## Brendan Burgess (6 Dec 2020)

That makes sense.

You can see the accounts to 30 September here :https://www.progressivecu.ie/images/library/documents/25112019-113905.pdf

This is my summary 






As of September 2019, they had €199m in total assets, so they had to have reserves i.e. accumulated profits of €20m.

While they had €28m and that might seem comfortable, this could have deteriorated badly over the last year. 
If customers had put another €30m on deposit, that would have increased the reserve requirement to €23m.
And if they lost money during the year, it would have reduced the reserves. 

As you can see, they don't need the cash.





So, they can return €100m and still have €40m cash which would fund any possible increase in lending.


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## Gordon Gekko (6 Dec 2020)

My credit union has imposed a savings cap of €3,500 a month which is annoying as I dip into my savings every so often for bits and pieces. So now if I take out €10,000, it’ll take 3 months to get the money back in.


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## RedOnion (6 Dec 2020)

Brendan Burgess said:


> While they had €28m and that might seem comfortable, this could have deteriorated badly over the last year.
> If customers had put another €30m on deposit, that would have increased the reserve requirement to €23m.


€28m was total reserves. Their Regulatory Reserves were only €22.2m, or 11.5%. Minimum is 10%

While they've made a surplus this year, their assets have increased to €224m accordingly to the letter to members.



			https://www.progressivecu.ie/documents/document-downloads.asp?FormID=153&FormName=Savings+cap+information&DocType=pdf&URL=images/library/documents/02122020%2D160207%2Epdf
		


(Edited to add actual asset values rather than my guess.)


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## Brendan Burgess (6 Dec 2020)

Thanks Red.

OK, so that is even  tighter.   They have probably had to increase their bad debts provisions in the light of Covid.

Brendan


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## Pinoy adventure (6 Dec 2020)

Brendan is this what another member on here was going on about recently ???the 10%
Gordon when did they introduce that rule ?


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## Gordon Gekko (6 Dec 2020)

They introduced it in November. You can lodge a maximum of €3,500 per calendar month. And it doesn’t matter if you’ve made a withdrawal that month (e.g. if you withdraw €5,000, you can still only lodge €3,500). It’s because of the volume of saving due to Covid. If you make a meaningful withdrawal, it could take you months to build it back up. The maximum you can have is only €25,000 anyway.


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## Brendan Burgess (6 Dec 2020)

Pinoy adventure said:


> Brendan is this what another member on here was going on about recently ???the 10%



Yes. 

One could understand that the banks should keep reserves of 10% of the amount they have in loans in case of bad loans.

But it does seem odd to make the Credit Unions keep 10% of loans and cash and bank deposits.

Having said that, the solution is very easy - get rid of the bank deposits.

Brendan


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## Pinoy adventure (6 Dec 2020)

Gordon Gekko said:


> They introduced it in November. You can lodge a maximum of €3,500 per calendar month. And it doesn’t matter if you’ve made a withdrawal that month (e.g. if you withdraw €5,000, you can still only lodge €3,500). It’s because of the volume of saving due to Covid. If you make a meaningful withdrawal, it could take you months to build it back up. The maximum you can have is only €25,000 anyway.



Is that 1 of the larger credit unions ?


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## RedOnion (6 Dec 2020)

Pinoy adventure said:


> Is that 1 of the larger credit unions ?


Lots of the large credit unions have introduced savings caps in the past 2 years. Initially a total limit was common, but a monthly limit has also been intrigued by many. Progressive for example, have had a savings cap of 30k, and max savings of 5k per month for the past year.


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## Brendan Burgess (7 Dec 2020)

Covered in the Irish Times 









						Credit union tells members to cut savings to just €15,000
					

Progressive Credit Union in north Dublin tightens restrictions after increase in savings




					www.irishtimes.com


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## Brendan Burgess (7 Dec 2020)

They say that they have €50k in excess cash.  Looks more like €130k to me.

They introduced a €30k limit last year but still have seen a big increase in deposits.

Malahide has a limit of €10k down from €20k introduced in October 2017.  However, when they introduced the €20k limit they just stopped taking new money over this limit, and did not tell customers to take their money out. 

They don't publish their accounts online, so if any member has a set, I would be interested in seeing the balance sheet. My guess is that their reserves exceed their loans. In other words, they could return all the savings to members and they would still have cash left over.

Brendan


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## RedOnion (7 Dec 2020)

Brendan Burgess said:


> They don't publish their accounts online, so if any member has a set, I would be interested in seeing the balance sheet.


Here's link to their 2018 accounts.



			https://malahidecu.ie/wp-content/uploads/2019/07/Malahide-Annual-Report-2018.pdf


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## 24601 (7 Dec 2020)

Brendan Burgess said:


> They say that they have €50k in excess cash.  Looks more like €130k to me.



I think they might be just referring to the excess that they have to keep liquid under they regulatory requirements since these deposits and investments are attracting negative returns.


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