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dawn.kennedy@cuda.ie

CUDA Partners with Initiative Ireland to Launch New Housing Fund Backed by Irish Credit Unions

By | News

Dublin, Ireland, 30 August 2020, Minister for Housing, Local Government and Heritage, Darragh O’Brien TD, today welcomed the announcement by Initiative Ireland and CUDA, the Credit Union Development Agency, of their plan to launch a new social and affordable housing fund supported by the Credit Unions of Ireland.   

Expected to launch later this year, the new fund will enable Credit Unions from across Ireland to avail of recent regulatory changes which empower the Credit Unions to lend to Approved Housing Bodies (AHBs) through a regulated fund.

Initiative Ireland, which specialises in funding social and affordable housing developments nationwide, will act as an Investment Advisor to the fund, sourcing and managing projects with Approved Housing Bodies.

CUDA with membership of over 50 credit unions nationwide, which manage over €7 billion in assets, will lead engagement with member credit unions as a sub-adviser, with the expectation that the fund will deploy over €300 million per annum on behalf of Credit Unions to deliver over 1,000 new homes per annum.

Minister Darragh O’Brien TD said, “I would like to commend the partnership between Initiative Ireland and the Credit Union Development Association which will see the creation of social and affordable homes by our AHBs. This strategy has significant potential to make a real impact to Credit Unions, Approved Housing Bodies and ultimately the lives of people across the country.”

Kevin Johnson, CEO, CUDA said, “Through this new fund our members will play a key role in supporting an increase in supply of much-needed housing nationwide. The fund will provide competitive finance to Approved Housing Bodies which play a key role in the delivery of social housing today. As not-for-profit enterprises, they purchase and commission new social housing for long-term lease back to local county councils.”

“This activity is vital in promoting and enabling the construction of social housing nationwide. We hope to offer an ongoing sustainable and affordable source of funding for Housing Bodies and in turn credit unions will have the opportunity to deploy their members savings into a conservative, sustainably managed strategy.”

Padraig W. Rushe, CEO, Initiative Ireland said, “As a social impact finance specialist, we are committed to strategies that deliver clear societal and environmental impact and promote financial inclusion. Over the last five years, we’ve worked with our impact investor community to deliver social and affordable housing projects across the country. Our partnership with CUDA is the logical next step, as we look to increase the scale of that impact.” 

Initiative Ireland, headquartered at NovaUCD and supported by Enterprise Ireland, was founded in 2015 with the goal of providing increased financial inclusion, competition, and sustainability to the Irish Finance Market.

To date the firm has provided finance to developers and approved housing bodies in support of smaller scale projects, financed by their peer-to-peer impact investor community comprising of Funds, Corporates, Pensions and Private Investors.

All loans are secured with a first legal charge over the properties and loans are managed from end-to-end by Initiative Ireland as the loan agent. This new strategy will increase the scale of lending they will be able to offer, specifically aiding the expansion strategies of Tier 3 Approved Housing Bodies nationwide.

Sinead Byrne, COO, Initiative Ireland said, “As a values-based finance company, we’re committed to providing honest, fair and inclusive finance to deliver social good and fair returns. We’re delighted to announce our partnership with CUDA and Irish Credit Unions which were also founded on those principles and we look forward to building on that relationship over the coming years.” 

LTR Kevin Johnson (CEO of CUDA), Minister Darragh O’Brien TD, Sinead Byrne (COO of Initiative Ireland) and Padraig W. Rushe (CEO of Initiative Ireland).

CUDA welcomes new Minister for State with specific Credit Union responsibility

By | News

Credit Unions contact the new Minister offering support for rebuilding the economy at local and national level

Credit unions have warmly welcomed the appointment of Seán Fleming TD as Minister of State at the Department of Finance with responsibility for Financial Services, Credit Unions and Insurance.

Commenting on the appointment, Kevin Johnson, CEO of CUDA,

We welcome the appointment of Minister Fleming and as he works through the extremely difficult challenges in his role, we believe that credit unions can play a vital role in supporting him and his Government colleagues with the rebuilding of Ireland’s economy. We have an increased range of lending products – consumer loans now complimented with home loans and business loans, and we look forward to working with Minister Fleming to further broaden the financial support that credit unions can offer members and their local communities.

We have written to Minister Fleming to share with him how credit unions can support him in achieving aspects of the Programme for Government and contribute to rebuilding the economy, both at local and national level”.

CUDA welcomes first Minister with specific Credit Union responsibility

By | News, Representation

Credit Unions hopeful that the Minister can support the ongoing expansion of services to members and local communities

Credit unions have warmly welcomed the appointment of Jack Chambers TD as Minister of State for Financial Services, Credit Unions and Insurance which represents a significant step as it’s the first time that any Minister will have specific responsibility for the development of credit unions. According to CUDA (The Credit Union Development Association), Ireland’s Credit Unions have in excess of 3 million members and are the sole provider of credit for many of these members, accounting for approximately 34% of the consumer lending market.

Commenting on the appointment, Kevin Johnson, CEO of CUDA, said “We welcome the appointment of Minister Chambers and are committed to supporting him in his new role. Credit unions continue to excel at consumer lending, and are in far better shape to support members than was the case during the banking crisis. We have solid financials, with average capital of 16.5%, stronger governance, great digital capabilities and a reputation as Ireland’s most trusted financial services brand. We have an increased range of lending products – consumer loans now complimented with home loans and business loans, and we look forward to working with Minister Chambers to further broaden the financial support that credit unions can offer members and their local communities.

Keeping key credit union services available to members since the onset of Covid-19 has been a key factor in maintaining morale in local communities. Credit Unions have long believed in playing our role in addressing major socio-economic needs and see the provision of financial supports to be part of that duty.

We have written to Minister Chambers setting out how credit unions can support him in achieving aspects of the Programme for Government and contribute to rebuilding the economy, both at local and national level.”

Supporting SME’s under financial pressure

Mr Johnson went on to say, “Credit unions have significant members savings available for lending and their renowned personal touch that is normally applied to consumers can equally be applied to SME’s at their time of need. We hope the Minister will support our efforts to be part of the Credit guarantee scheme and while the scheme only guarantees a proportion of the money lent, we would be prepared to carry the balance of that risk for businesses in our local communities.”

Credit Unions are ready and willing to invest in social, co-operative and affordable housing schemes that could otherwise stall as a result of Covid-19

“Investment in social, co-operative and affordable housing schemes is required for Ireland to solve its housing crisis, and demand for this segment may increase as more people’s incomes suffer. Such lending is well aligned to the credit union purpose. We would support an amendment of the Credit Union Act to allow providers of such properties, such as AHBs, Housing Co-Ops, Local Authorities and others to become credit union members solely for the purpose of borrowing for their constituted objectives.”

Covid-19 Recovery Bond

By | News

Credit Unions support the ordinary saver in accordance with their statutory object – to promote thrift among its members by the accumulation of their savings. This will continue, indeed funds are flowing into credit unions as they are highly trusted.

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West of Ireland Credit Unions in Proposed Merger

By | News

On 15th June 2020, a proposed merger between St Anthony’s & Claddagh Credit Union & St Jarlath’s Credit Union was announced. Combining the resources of the two successful credit unions will create one of Ireland’s most significant credit unions, which will be hugely beneficial for members, local communities and Galway in general. The two credit unions have successfully collaborated on a number of initiatives over the past number of years, and have also been to the forefront of many major projects which have benefited them and indeed other credit unions throughout the country. In particular these have included digital-marketing and member engagement roll-outs. The two credit unions are strong both financially and reputationally, and with the advances they have made in digitising their services, they have significantly improved member experiences by making it easier for people to do business with their credit union.

CUDA, particularly through its collaborate digital development hub, the Solution Centre, is hugely impressed with the innovation and sector leadership shown by St Anthony’s & Claddagh and St Jarlath’s Credit Unions over the last few years and wish them well with this initiative.

Update on engagement with Registrar to CUDA communications

By | Owner Members, Representation

Dear all,

We have received a response to our correspondence of 7th April and 22nd May from the Registrar. It is a lengthy and detailed response, and we are pleased that the Registrar has offered to host a workshop session with us to discuss the various policy questions we raised and also to work with us on the operational side of things in preparation of financial year-end.  Please see here the letter received from Patrick Casey, Registrar of Credit Unions, as well as, for your information, a copy of the CUDA letters issued on 7th April here, and on 22nd May here.

Our letter of 22nd May highlighted that much has happened since our initial communication, in particular there have been many helpful insights gained as you and other credit unions demonstrated their operational resilience and more recently positive return to some lending activity. In the intervening time CUDA has sought and achieved confirmation that all borrowers, and all forms of loan repayment arrangements, will be treated equally by the CCR, of some flexibility on reporting, and that the CBI has trigger points for the key measures.

We also had the opportunity, as did other stakeholders, to submit to the CUAC for their report to the Minister on impact of Covid-19 on credit unions and recommendations for their role in recovery of the economy, and this process further refined our recommendations and who can make them happen. Our submission will also certainly contribute to a constructive workshop with the RCU as it shows how our regulatory asks fit into a wider plan.

On a macro level there is actually good alignment between the CUDA member agreed strategic plan and the CBI agenda, namely clear need for business model change, collaboration, best risk management and governance, and related balance sheet evolution. On a micro level, we received our goal to get confirmation that CBI are working on the key areas we identified, and as they opt to recap the source regulation or legislation they do not share insight to their trigger points. While agreeing to work with any concerned credit union, in response to our request for a pragmatic approach, you will also see in places responses to matters we did not raise which appear to be a reaction to some of the inappropriate commentary recently circulating. The attached communication from the Registrar will be posted on their website in due course.

The CUDA Management Committee have agreed to continue with the measured approach pursued by CUDA, as it has acheived the goal to get confirmation that CBI are working on the key areas identified in our letters and they will continue to work with us on them. We will also have the opportunity to clarify some important points, for example:

  • Humanitarian lending – we are seeking the Regulator’s view on the issue where credit unions are encouraged to act, but often without full facts on how government will support the member financially with regard to income subsidies;
  • Investment assets – while the rules are clear we are trying to understand how the regulator will react if all sovereign and bank issuers have their credit downgraded, i.e. plan for worst while hoping for the best;
  • Liquidity – previously we worked with the RCU investigating a centralised mechanism, and we would like to revisit this again, similar to that in the US which is supervised by the  NCUA, and with something this complex we had hoped that the regulator will consider their support.
  • Y/E 2020 – the RCU confirmed that they are speaking to auditors and international accounting standards will apply, and we have requested an earlier release of the annual circular – ideally this month.
  • Solvency – one of the main learnings during the intervening period is that this, hopefully, will prove less of an issue due to Covid-19 directly. What is clear, however, is that the key areas of savings inflows, the ability to convert these into loans, possible requirement for bad debt provisioning, and the balancing of these to maintain capital requirements are clearly the responsibility of the Board. Therefore, it cannot be overstated the importance of documenting how you are making all decisions relating to these matters, in particular capture all the assumptions you are making and the basis for them.

We take huge pride in the way that you all have reacted to the crisis ensuring that you continue to offer essential services to your members. Keeping credit unions open has been a key factor in maintaining morale in your relevant community. CUDA will continue to deliver solutions to support you as you support your credit unions members. With that front of mind, we look forward to taking up the offer by the Registrar to host a workshop, and while focusing immediately on operational and financial challenges in the short-term, we will continue to lobby for the regulatory changes that are required down the line. We will also continue to engage with the Minister, and CUAC, to seek the legislative changes that are required.

Many thanks and please contact me if you have any queries.

Regards for now,

Kevin

 

CUDA submission to CUAC for Repot to Minister for Finance

By | Owner Members, Representation

Hello all,

We hope this message finds you well.

CUAC recently asked CUDA for its support in preparing a report for the Minister which would outline the important role that the credit union sector can play in supporting the economy during the current restrictions and when they are phased out. It asked that CUDA make recommendations and outline the views of CUDA members on the following:

  1. implications of COVID-19 on the sector in the short-term and medium to long term;
  2. the role credit unions could play in the economic recovery;
  3. challenges and opportunities for the sector, incorporating implications of COVID-19;
  4. recommendations, and rationale, for legislative and regulatory changes, quantified as far as possible.

The input from Owner member credit union CEOs, our knowledge of your current strategy, the work completed during the CUDA Strategic Plan process and the deliberations by the CUDA Management Committee, have been key to the preparation of the attached document. I believe that the contents of this submission could help you to reframe your own credit union’s strategic plan for the remainder of 2020 and beyond, making appropriate and significant adjustments to allow for the impact of COVID-19 lock-down and plan for the difficult economic times ahead.

Difficult times can bring opportunities for those that seize the moment and lead their respective communities. While many competitors are using the crisis to rebuild their poor brand perception, credit unions have no such need as they are already the most trusted and respected brand in the country. This coupled with a strong capital base, enables credit unions help all their members, those unfortunate to experience a drop in income and need some forbearance, and also those fortunate to continue to be gainfully employed. Over the next few weeks and months the latter group of members will realise that the best deals, whether that be a new car, home improvements etc. are often achieved during recessions making this the ideal time to borrow. Many will assume that lenders have closed their doors and are reluctant to lend. We need to shout from the physical and digital rooftops that we are open and we are lending. There is no reason that credit unions can’t move from 33% of the unsecured lending market to over 50% by delivering a great member experience and being simply the best at meeting members’ needs.

So please have a read of the attached note to CUAC, available here, and perhaps have a re-read of the CUDA Strategic Plan document, and if we can assist you in any way as you re-visit your strategic objectives as a result of the Covid-19 crisis please don’t hesitate to contact me.

Regards for now, Kevin

 

Kevin Johnson

Chief Executive Officer

Credit Union Development Association

Update for CUDA Owners re. representative matters

By | Owner Members, Representation

Hello all,

I hope this email finds you well. I want to take the opportunity to update you on recent representation we have made on your behalf.

Communication with Minister for Finance

Yesterday, 22nd May, the Minister hosted a conference call with the Credit Union Representative Bodies [CUDA, CUMA, ILCU & NSF], he presented on how the economy has moved well away from the expected V shape to a U shape recovery for 2020 quoting the key statistics, and that his Department are considering the economic measures needed to start opening up the economy while managing the associated risks.

 

The Minister thanked credit unions for all they have done to date in local communities and what they have done for their members. He knows that you are not dealing with the same credit issues that were experienced in the past and that the rebuilding will take time. He stated that some decisions will not always be popular and wants to keep up the dialogue with the sector through the Representative Bodies.

 

During the conference call, Brian Corr updated us on the work CUAC were undertaking by carrying out a financial analysis of the impact of Covid-19 on the sector, looking at the impact from a short, medium and long term, and the role credit unions can play in the recovery. We are requested to make submissions and the report will be available, by the end of June, for the Minister.

The Minister was informed that all key elements of credit union business was trending against them, new lending has ceased while net savings’ inflow continue to increase. Whilst it is acknowledged that the immediate concerns reside primarily within the regulatory sphere, and while these are being pursued directly with the Registrar, the Minister supports the need for clear articulation by the Registrar of their intent as a reduction in surpluses and reserves occur. Concern was also expressed in relation to the imbalance in regulatory approach when compared with banks and the need to review the statutory stabilisation fund. Communications to date were compared with the higher quality of that provided by the PRA to UK credit unions. CUDA also requested the Minister’s consideration of an option for Credit Unions to invest in a Solidarity / Covid Bond to assist recovery, forbearance on levies and clarity on income supports as credit unions are getting very mixed messages.

On the previous call with the Minister, 23rd March, he asked us to consider the rebound stage and CUDA addressed this yesterday noting that lending is critical and requested as a matter of urgency enhancements to the lending model to allow credit unions, individually and collectively, provide loans for social, cooperative and affordable housing, an activity we believe will be part of the early re-opening of the Country, and to allow credit unions introduce and/or share loans between one another.

The Minister summed up saying these were sobering commentaries while noting the issues relating to capital and provisioning were regulatory matters for the CBI, and that these will be brought to the Financial Stability Group by the Dept.

Communication with the Registrar

While we are participating in calls twice a week with the CBI which deal with operational resilience matters, we have also set out for the Registrar specific questions on the following areas:

  1. Treatment of humanitarian lending
  2. Investment assets qualifying criteria and limits
  3. Liquidity on an individual credit union and sectoral basis
  4. Financial accounting guidance for year-end Sept 2020
  5. Treatment of breaches of compliance requirements
  6. Capital adequacy on an individual credit union and sectoral basis

We will keep you posted on developments, and responses, to the concerns we raise, and please don’t hesitate to contact us if you have any queries or wish us to raise any other issues.

Stay well and stay safe, regards for now, Kevin

 

Kevin Johnson

Chief Executive Officer

Credit Union Development Association

Update on COVID-19 stakeholder activity

By | COVID-19, Owner Members

As previously reported, we are part of a stakeholder group, chaired by the Dept. of Finance and meeting weekly. This is a quick email is to keep you updated on a number of representation issues and topics in discussion following the Government’s decision to allocate credit unions as essential retail outlets, and resulting in credit union staff being deemed essential workers to travel to and from the workplace.

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