# Savings caps at multiple Credit Unions



## 1dave123 (8 Mar 2017)

Dundrum Credit Union have just placed a maximum limit on savings of €30,000 per adult.

Exiting savings above €30,000 already in place can be retained – but new savings above the limit can no longer be accepted.

Be interesting to see if other CUs follow suit.


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## Brendan Burgess (8 Mar 2017)

Great idea. 

Glad to see a Credit Union seeing sense at long last. 

Brendan


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## fistophobia (8 Mar 2017)

If you have this kind of money, you should not be using a credit union.
It goes againt the ethos of the credit union movement.


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## willyfones (8 Mar 2017)

Do you have a link to where the information is? 
I believe Dundrum is called Capital Credit Credit Union now.   

Are you sure its not a cap on shares that receive a dividend payment? With everything above this amount getting zero..


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## so-crates (8 Mar 2017)

Carlow Credit Union have had a cap on shares (circa €23k as far as I can recall) for many years, but you could put anything over that amount into a deposit account which (theoretically at present!) would earn interest. The max that you can put into the deposit account is €40k.


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## Gordon Gekko (12 Mar 2017)

fistophobia said:


> If you have this kind of money, you should not be using a credit union.
> It goes againt the ethos of the credit union movement.



I don't agree with this. Being a member of a Credit Union is prudent, as in the event of another financial crisis it might be one's only source of credit.

As an aside, I transferred €10k to my credit union account last week and it was rejected (to be fair, they called me to explain the new cap).


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## Lightning (13 Mar 2017)

Charlie Weston in the Indo has a story today on savings caps at credit unions. 

Multiple credit unions are introducing caps or lowering caps.


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## Brendan Burgess (13 Mar 2017)

Gordon Gekko said:


> I don't agree with this. Being a member of a Credit Union is prudent, as in the event of another financial crisis it might be one's only source of credit.



But the Credit Unions have massively surplus cash. All they can do with your deposit is cross the road and put in Bank of Ireland where they will probably be paid nothing or, in some cases, charged for it. 

Quite a few credit unions could repay all shares in full and still fund the existing loans from their reserves. 

Brendan


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## TheJackal (16 Mar 2017)

CANA CU have capped it at 50K in 2016, down from 70K


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## 24601 (20 Mar 2017)

It's an interesting one. Credit unions are snookered in terms of income generation given that the personal lending market has nearly halved since 2009, so whilst they've retained their market share, it's a share of a much smaller pie. The fact that they have all these surplus funds and the fact that these keep growing is clearly a sign of confidence/trust but the since they can't lend it out it is resulting in huge balance-sheet mismatches. They also have to keep 10% of total assets in regulatory reserves. The average money out on loan as a percentage of total assets across the sector is close to 25% - say about €4 billion – which is generating somewhere in the region of an 8-10% return. Trying to find a home for the other ~€12billion with current yields and regulatory restrictions on permissible investment options is an impossible task. The time for a cap was probably 5-6 years ago but it’s definitely something that most credit unions should be looking at introducing, notwithstanding the potential reputational fall out. Unfortunately, despite the sense in Brendan’s suggestions that they should just hand the money back to members, the reality is that this could have huge ramifications that aren’t wholly quantifiable and many credit unions aren’t willing to take this chance despite the obvious benefits for members and the CU itself.

Indeed, the true and sorry state of the I&E positions for many CUs will only become apparent from this year/next year on, as many CUs have decent investments that are only starting to mature this year with the money being reinvested at close to 0% or worse.

If they could make better use of their surplus funds through more diversified types of lending there might be decent scope for improved competition in the non-personal loans market, which would ultimately benefit consumers, but CUs are (understandably) having a hard time convincing the Central Bank that they can engage in riskier, longer term lending that is funded from short-term deposits.

This is compounded by the fact that they're all individual entities governed by volunteer boards of directors with varying standards of management and scale. Some are excellent, progressive organisations that do what they do extremely well, but many have their heads in the sand and are hugely amateurish, with everything in between. This is their key problem. The disparate and atomised nature of their combined assets means that the whole is not greater than the sum of its parts because so many of those parts are a bit clueless. If they could transform their model quickly they could be a genuine force but they recently rejected a proposal from Eddie Molloy/Advanced Organisation to do this so I’m afraid we’ll probably see a slow decline in many credit unions which will be resolved through regulatory intervention. The sad thing is that most CUs are so well capitalised that a lot of wealth will be destroyed during this decline!


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## MrEarl (21 Mar 2017)

Hello,

Subject to the necessary legislation, regulation and talent being employed, the obvious solution to this is problem is to permit the CUs to provide a wider range of financial services. However, this is a long term solution as it would take years to bring in the legislation, regulation and get CUs staffed properly etc. 

Let's not forget, we want and need more competition across the financial services industry in Ireland to ensure maximum benefit to the customer (or member, in the case of a CU).

In a conversation with Mr. Burgess a few months back, I recall that he had an excellent idea which he called "CUBS" (Credit Union Building Society) which would be a Building Society owned and funded by CUs across the country, operated by experienced, suitably skilled and qualified staff, to provide homeloans and other services. A simple and effective solution to putting the CU's excess funds to work, which would not need the entire country's CU staff to be upskilled or replaced.

With a bit of luck, someone from the Dept. of Finance, Central Bank or ILCU will read this and "borrow" the idea of CUBS then run with it....


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## fernrock (10 May 2017)

An elderly relation of mine has just received a letter telling her to bring her credit union balance below €30K. Her life savings being in the CU.
The credit union office is local and thus easily accessable,  with human interaction.

She is now faced with either, keeping the excess at home -against all advise or, trying to deal with a machine in a bank 10Km away,or  where you have to make an appointment to see a human via phone to a machine .
A daunting experience for an 85 Yr old.
This I think is a bad idea.


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## Lightning (10 May 2017)

Some accounts can be opened remotely without visiting a bank.


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## fernrock (12 May 2017)

CiaranT said:


> Some accounts can be opened remotely without visiting a bank.



Try explaining that to an 85 year old with hearing difficulty. Even on the phone it is nearly impossible to speak to human  in a bank.


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## Lightning (12 May 2017)

Another option is State Savings products which can be opened via An Post.


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