Credit Unions may need €500m in taxpayers funds

As I said

Folks

Can you all calm down please? It deters others from contributing to the discussions.

We opened this forum on Askaboutmoney to discuss and analyse serious issues.

By all means, disagree with each other. But...

Avoid personalised attacks

Avoid inflammatory language

Avoid speculating about the identity of posters on askaboutmoney.

Don't allow other users to provoke you. Ignore OTT attacks. It reflects badly on them, not on you.

Brendan
 
Avoided? The figure would be far higher had credit unions not been prevented from raiding their reserves to fund dividends.
 
Government set to inject up to €1bn into credit unions

Minister Michael Noonan has indicated that upwards of €1bn in tax payers funds may be required to capitalise credit unions. [broken link removed] Irish Examiner

Media predictions of substantial bailout funds being required to stabilise the sector have been correct all along despite persistent denial by ILCU and credit union activists.

How should Government inject money - does this mean it takes an ownership stake or nationalise as it did with the mutual building societies ?
 
News reports suggesting that they won't take an ownership stake and the capital will be repayable.

It's a bit strange as that sounds more like debt than equity but maybe they mean to use something along the lines of redeemable preference shares (I have no idea if the legal structure of credit unions allows this type of capital)
 
try arguments to reduce the leverage ratio instead. also see other threads for discussion on RWA...which I'm afraid hasn't been well informed by an appreciation of how RWA works. Try not to confuse regulatory capital with accounting asset losses.
 
@Anyone1: you are on teh right track there. Common sense tells you that the risky assets is just €4.7m against capital reserves of €1.7m = 36% - similar to the figures I have quoted in earlier posts.
Never mind Kaplan, he finds a way to make simple concepts sound complicated - I must look this up on google to see what the psychologists call such behaviour, I'm sure there is a complicated sounding name for it!
 
@anyone Large grain of salt needed as this is from an trade body that denied tax payers funds would ever be needed. ILCU has consistently talked down and at times misrepresented the scale of the problems.
 
@CU Manager and Anyone - suggest you two do up a paper on your proposed RWA approach and submit it to the Central Bank for comment
 
Good article in The Examiner by Bill Hobbs this morning.
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