# Naas CU to take over Newbridge CU



## Brendan Burgess (1 Aug 2013)

[broken link removed]



> A process involving the examination of possible credit union  combinations was undertaken, which resulted in an approach being made to  a number of credit unions including Naas Credit Union. In April 2013,  Naas Credit Union submitted a proposal to the Central Bank. The proposal  set out the basis upon which Naas Credit Union would be prepared to  combine with Newbridge Credit Union.



I don't understand the thinking here.  

If Newbridge CU has solvency problems, merging them with Naas will not solve them, it will just infect Naas CU. 

Unless Naas CU is so large, that it can absorb the losses in Newbridge. 

If the board and management of Newbridge are not up to the job, then a new board and management should have been appointed.

Brendan


----------



## Brendan Burgess (2 Aug 2013)

Anyone1 said:


> Now.....did any Board in any financial institution in Ireland predict the collapse of the economy here? If not, why arent they being marched out?



Actually, I think you will find that almost all the pre-crash directors are gone from the main banks.  I think  that Richie Boucher and Fergus  Murphy in the EBS are the only ones left.


----------



## ontour (2 Aug 2013)

Brendan Burgess said:


> Unless Naas CU is so large, that it can absorb the losses in Newbridge.



I would speculate that Naas will not take the losses.  Newbridge will be wound up and the loans, shares and members transferred to Naas.  The Deposit Protection Scheme will probably take a hit if there is a shortfall.  It will be interesting to see if there is a process of valuing loans where Naas take on higher risk loans for a % of the book value.  It will also be interesting to see if Naas take over the debt recovery on loans that have been written off.

Consolidation in the sector is badly needed, hopefully this creates the structures to enable it.  Over the last year there have been about a dozen similar situations in the US where a federal agency takes over the credit union and 'merges' it with a stable credit union.


----------



## WizardDr (3 Aug 2013)

Credit Unions through the ILCU claim to have about 80% of the population as members according to their statistics. More penetration in Ireland they say than in the world.

Here we have the situation at Newbridge where there are huge implications for the movement. And yet .. there are a handful of comments.

1. Either 80% of the public are not represented here 
2. The 80% is a fiction 
3. The movement is in fact dead.


----------



## MrEarl (3 Aug 2013)

Hello,

If I were a member of Naas CU and discovered that having the take over or "merger" of Newbirdge CU effectively imposed on me, resulted in an eroding of my CUs Balance Sheet, I would be far from happy.

I would like to see more clairty around whats happening here, including evidence that any losses incurred by Newbirdge CU have been dealt with via the protection scheme prior to a "merger" if I were a member of Naas CU.

I expect the members of both CUs will be asked to vote, so members of Naas should press for opportunity to see clear documentation prior to being asked to vote on such an issue and in the absence of satisfactory evidence, vote against any proposal in my personal view.

The entire concept of the mutual movement in Ireland has been flawed for many years in this country, whether you talk about the now defunct building society movement or the CU movement ... a genuine shame, but typical of how Ireland operates in many sectors sadly.

Oh, for the record, I have no involvement with either CU or the Central Bank by the way ... however, I am a member of another CU and would be very concerned if this were occuring where I was a member.


----------



## Brendan Burgess (3 Aug 2013)

Hi MrEarl 

Very well put. 


As a member of Naas, I would be very concerned that my dividend would be badly hit paying for the Newbridge losses one way or the other. 

But  many credit unions are paying no dividends and bizarrely it does not seem to affect their levels of shares. 

Brendan


----------



## ontour (3 Aug 2013)

MrEarl said:


> I expect the members of both CUs will be asked to vote, so members of Naas should press for opportunity to see clear documentation prior to being asked to vote on such an issue and in the absence of satisfactory evidence, vote against any proposal in my personal view.



Both credit unions will probably have EGMs which will be attended by 1% of the membership.  Most credit union members are not 'engaged' with the credit union, the credit union is a service provider and they have no desire to get involved in strategic decisions.

I am not sure what the point would be in giving the Newbridge membership a vote?  What is the alternative?

If people in Newbridge have shares in the credit union and are not happy being a member of Naas, they could form a new credit union in Newbridge.


----------



## Brendan Burgess (4 Aug 2013)

ontour said:


> If people in Newbridge have shares in the credit union and are not happy being a member of Naas, they could form a new credit union in Newbridge.



Good idea, but I suspect that the Central Bank won't allow the formation of any new credit unions or would make it extremely difficult for them. It would take years to overcome the obstacles. 

The Sunday Business Post is reporting today 



> The Department of Finance will  have to fund a significant capital shortfall in Newbridge Credit Union  to support its takeover by neighbouring Naas Credit Union, _The Sunday Business Post_ has learned.
> 
> 
> 
> The  shortfall, which will be plugged from the Department's €500 million  credit union resolution scheme, could run into the tens of millions due  to what one Central Bank source called "severe and persistent breaches  of regulations, particularly around reserves”.



Why don't they just wind it down?  Stop issuing new loans. Collect the old loans. I suppose the shares would all be withdrawn and the government would have to put in the money. Then the borrowers would stop paying. So maybe it would cost a lot more to close it down.


----------



## Brendan Burgess (4 Aug 2013)

Hi Anyone

Most are paying dividends, but many are not, which is what I said.  They are documented here 

What is your credit union dividend for 2012? 

The compilation in 2010 was more comprehensive and 2011 

The ILCU said in 2011 that it would be around 80 Credit Unions. I don't know if this number has increased or decreased since then.

Not sure why you are having a problem with paragraphs?  you were able to do them in  a few days ago.  Is there something different in your set up since then?


----------



## Brendan Burgess (4 Aug 2013)

Hi Anyone

Some odd arguments there? 

I said that many credit unions paid no dividends and that is factually correct.  

The service it is providing comes at a big cost to being bailed out by the taxpayer.  In principle, non systemic companies should be let fail. The members could get the service elsewhere - other credit unions and banks. 

The taxpayer should not be funding the depositors in credit unions or in the banks. 

I don't understand the comparison with askaboutmoney at all?  It is successful. The taxpayer does not fund it.  

Brendan


----------



## ontour (5 Aug 2013)

Brendan Burgess said:


> In principle, non systemic companies should be let fail.



Is there any merit in differentiating between companies and co-operatives?


----------



## Brendan Burgess (5 Aug 2013)

I don't think so.  Brendan Logue   , the Credit Union Director in The Financial Regulator did his best to pull back the Credit Unions from bad lending and bad investment but he faced massive kickback from the CU movement which just did not want any limits on their independence. 

They and their members should pay the price now in terms of wind-ups and lost shares. 

If Brendan Logue had been in charge of the banks, we would all be better off.


----------



## ontour (6 Aug 2013)

Brendan Burgess said:


> They and their members should pay the price now in terms of wind-ups and lost shares.



As participants in the Deposit Protection Scheme, they are covered up to 100k unless you are proposing that credit union members should not be eligible for deposit protection.

I agree about the recklessness of credit unions but also think that they contribute significantly to society.  An efficient process should be defined to wind up credit unions in a cost effective way.  Other credit unions will take on their membership and a consolidated credit union sector will be to the benefit of members and society.


----------



## Brendan Burgess (6 Aug 2013)

Hi ontour. I believe that all depositors in banks and credit institutions should lose their money if the the banks lend irresponsibly.


----------



## WizardDr (6 Aug 2013)

I presume the losses on the Newbridge loan book must be catastrophic, otherwise the €2m trousered by E&Y which dwarfs any CEO salary + management team of any CU in the country. Just how much are the Newbridge provisions in excess of what was already provided for. Is there fraudulent lending or just incompetence. Why the secrecy?


----------

