When a well run CU "merges" with a badly run CU
- Thread starter ajapale
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Brendan Burgess
Founder
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It depends.
If there is a voluntary merging and the poor management of one credit union get to run the better run credit union, then they would suffer.
If the question is being prompted by the Tralee takeover of Killorglin, then the guys in Tralee will be in charge, so the merged union will be better run.
I gather that Tralee has been given €2m to help with the takeover, so they won't lose financially.
Brendan
If there is a voluntary merging and the poor management of one credit union get to run the better run credit union, then they would suffer.
If the question is being prompted by the Tralee takeover of Killorglin, then the guys in Tralee will be in charge, so the merged union will be better run.
I gather that Tralee has been given €2m to help with the takeover, so they won't lose financially.
Brendan
In general a badly run CU will not Merge with a well run CU. Its more likely that the well run CU will be asked to take over the badly run CU. Its referred to as a Transfer of Engagement. Either the Central Bank or ReBo will do the asking. Or in some cases the badly run cu will be brave enough to ask its local better CU to take them over. Either way it should be recognized that the badly run cu will be better off as a result.
The members of the well run CU may initially be worse off in that the value of their shares (your savings of €100 are worth €110 in a CU with 10% reserves) may briefly dip, but this should be counterbalanced by improved growth/business over the short term. In cases where the dip is severe then the well run CU will need to be compensated
The members of the well run CU may initially be worse off in that the value of their shares (your savings of €100 are worth €110 in a CU with 10% reserves) may briefly dip, but this should be counterbalanced by improved growth/business over the short term. In cases where the dip is severe then the well run CU will need to be compensated
I would not be entirely confident that the staff at the "well run CU" were either skilled or experienced enough to assess the risks, when taking on a "badly run CU" or equally, that the provisions in place etc. at the "badly run CU" are always adequate and reliable.
Risky business, having CUs with problems merged into good CUs and often, it's the members of the good CU that are losing out with little or no real say in whats happening....
Gerry Canning
Registered User
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Are not most of the (badly) run Unions ,not so much badly run as too small to be have the scale to operate in todays Regulatory environment?
I would hope that the (well) run Unions have in place good internal and external advice before taking on their (poorer) cousins.
From what I see ; outside of a few High-Profile (lost the run of themselves) most Unions are secure.
There is a Risk to the (good) taking the (bad) but name the Bank/large accountancy practice that should be able to advise them !
I believe that Unions have a much better finger on Financial reality than our (skilled) experts ever had.
I would hope that the (well) run Unions have in place good internal and external advice before taking on their (poorer) cousins.
From what I see ; outside of a few High-Profile (lost the run of themselves) most Unions are secure.
There is a Risk to the (good) taking the (bad) but name the Bank/large accountancy practice that should be able to advise them !
I believe that Unions have a much better finger on Financial reality than our (skilled) experts ever had.