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dawn.kennedy@cuda.ie

Oct 10 2021

BoI branch closure decision may see consumers move to Credit Unions in many Irish communities

By News

Commenting on the Bank of Ireland branch closures, Kevin Johnson CEO of CUDA (Credit Union Development Association),

“Friday’s closures will be felt by consumers in up to 80 towns and villages throughout the country. While there is undoubtedly a move towards a more digital offering in the financial services sector, there are still a significant cohort of people who are not ready to make that change. The migration of banks to self-service branches has been a difficult transition for many people – particularly older customers, many of whom still favour face to face interaction. However, today has taken this migration one step further, with people in the affected locations no longer being given even a self-service option.

While Credit Unions have made great strides in terms of digital developments, the community ethos means than maintaining a high-profile local community presence is integral for the movement. As with Ulster Bank’s planned exit, we believe the announcement today will drive more and more people across the country to becoming members of their local Credit Union so that they can avail of traditional banking through both digital and face to face means, a pattern we’ve seen in other countries including Canada and the USA.”

 

Sep 29 2021

Transfers of Engagements:  A ‘Learning’ Model – CUDA & CU CEO Forum

By News

This paper is the product of a joint initiative between the Credit Union Development Association (CUDA) and the Credit Union CEO Forum. The paper offers unique insight to the lessons that emerge during the transfer of engagements process from the perspective of three stakeholder groups, namely the ‘Board of Directors & CEO’, ‘Regulator’ and ‘Members’. These insights are gathered from published research, the authors’ experiences and their conversations with CEOs who have participated in multiple transfers of engagements.

Method

Twenty-six transfer of engagements lessons are documented. A majority of these lessons are acquired by the ‘Board of Directors and the CEO’, next by the ‘Regulator’ and last by ‘Members’. This is reflective of the effort contributed by the respective parties and the proportionality of responsibility they have in the transfer of engagements process.

A ‘learning model’ is constructed to guide the creation of ‘strategic’ transfers of engagements. The imperative that emerges is that the Board of Directors and CEO (of transferee Credit Unions) have a vision and purpose of what they seek to achieve from a transfer of engagements for their members. Critical to this is an understanding of what members really value.

Recommendations

  • A more streamlined and less costly transfer process should be put in place by the Regulator, particularly where the transferor is small in asset size and the transferee has a breadth of transfer experience.
  • The Regulator should introduce a risk categorisation of Credit Unions, similar to the CAMEL grading mechanism, this would create a greater understanding of each Credit Union’s strengths and weaknesses at the outset of transfer of engagements discussions.
  • Member Resolution for the transfer of engagements should occur prior to Credit Unions embarking on the lengthy and costly due diligence, business planning and integration planning phases of the transfer process.
  • A significant exposure for transferee Credit Unions exist during the period from completion of the due diligence to the completion of the legal and regulatory process. As a solution, the authors suggest the implementation of a process whereby the transferee Credit Union has approval input in situations where such exposures could potentially occur, for example via a Heads of Agreement mechanism.
  • The Regulator should commence a review of loan category limits. Future transfers are likely to create Credit Unions of significant scale whose business model could be hampered by existing lending limit.

The Paper can be downloaded here.

CUDA’s Standing Orders Podcast series is specially designed to inform and support member credit unions.   In this episode, Peter is joined by Donal McKillop, Professor of Financial Services at Queen’s University Belfast, and Chair of the Credit Union CEO Forum, and Kevin Johnson, CEO of CUDA.

They talk about the experience of mergers across the sector and the structural options going forward. Donal and Kevin, with the assistance of others in the sector, have researched and analysed the successes and learnings of mergers over the last five years and have recently produced a paper on the subject titled, ‘Transfers of Engagements: A ‘Learning’ Model’.

Standing Orders Podcast can be streamed directly from CUDA’s website at the link here or is available on all the usual podcast channels including Apple, Spotify and Google Podcasts, where you can subscribe to get notified when new episodes become available.

 

Sep 27 2021

Credit Union Sector Levy Regulations 2021

By News

The Minister of State, Sean Fleming T.D today, 27th September 2021, issued a press release on the Credit Union Levies for 2021. Commenting on this Kevin Johnson, CEO of the Credit Union Development Association, stated:

We note that the Minister has decided to continue with the levies for Resolution and for Stabilisation at the previous years levels.  It is disappointing that the Minister deems it appropriate to continue to charge a levy for stabilisation as no financial assistance has been provided to credit unions under the Stabilisation Scheme to date and no applications for such support have been made by a credit union.

While CUDA continues to support the purpose of a stabilisation fund, we believe the fund has reached an optimum size and therefore the Stabilisation Fund Levy should be set at 0%.

Sep 15 2021

Credit Unions and CUDA back New Fund to deliver 10,000 new homes

By News

CUDA and Initiative Ireland announce approval of new Fund, which aims to lend €600m to Approved Housing Bodies, to support delivery of 10,000 new homes over 10 years

Up to 100 Credit Unions across the country are expected to participate in the first Credit Union backed house-building fund which is anticipated to deliver 10,000 units over the next 10 years. CUDA first entered into a partnership with Initiative Ireland in August 2020 to establish a new Fund that would lend to Approved Housing Bodies (AHBs), with the goal of supporting the delivery thousands of much needed affordable and social homes. The Fund has now received final approval from the Central Bank enabling Credit Unions who have committed to the strategy, to now commence investment.

The new fund will enable Credit Unions from across Ireland to avail of regulatory changes which empower the Credit Unions to lend to Approved Housing Bodies through regulated funds. 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 €7bn in assets, shall support engagement with member and non-member Credit Unions as a sub-adviser to the Fund Distributor, with the expectation that the fund could lend over €600m to deliver over 1,000 new homes per annum.

Commenting on the announcement, Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Sean Fleming TD said,

“I would like to commend the partnership between Initiative Ireland and the Credit Union Development Association which will see the delivery of thousands of social and affordable homes by our Affordable Housing Bodies. Since I became a Minister, it has been a personal priority of mine to facilitate Credit Union investment in large scale social housing projects. Credit Unions, which are an embedded in our towns and villages, are to become one of the key funders of new homes in so many communities across the country. I truly believe that the involvement of credit unions is absolutely appropriate and a watershed moment in terms of scaling up the delivery of homes for so many.”

Kevin Johnson, CEO of CUDA said,

“CUDA and Irish Credit Unions have been working on this development for some time and we are not surprised by the huge interest amongst Credit Unions. As a result, the Fund will be open to all Credit Unions regardless of whether they are CUDA members or not. Through this new fund, CUDA 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 and affordable housing today. The Fund will offer an ongoing sustainable and affordable source of funding for Housing Bodies and enable Credit Unions to deploy considerable members savings into a conservative, sustainably managed strategy.”

 Padraig Rushe, CEO Initiative Ireland said,

“Initiative Ireland specialises in funding the delivery of private, social and affordable housing across Ireland, working with developers. Through the Fund, we can now also provide flexible and fast funding to Approved Housing Bodies to commission and acquire completed developments. Combined with our existing finance offering for developers, we can help to deliver a balance of private, social and affordable housing where it is most needed.”

Apr 16 2021

Consumers already switching to credit unions

By News

While the departure of Ulster Bank, the withdrawal of services by other banks, and now the possible departure of KBC will be upsetting for staff and customers at these entities and we sympathise with them, it is likely to be a positive milestone for credit unions.

Larger credit unions, most of which offer a comprehensive range of personal loans, SME loans and mortgages, current accounts, and excellent online facilities, have already experienced consumers switching from Ulster Bank. There is a trust issue between banks and some of their customers and while inertia has prevented many from leaving the banks, customers of these banks now need to make a decision as to who to bank with.

We believe the fact that more and more credit unions, working collaboratively, now have a full suite of products will play in their favour.  This coupled with their commitment to supporting local communities throughout the pandemic is why credit unions continue to see a strong growth in performance and have expanded their position as the ‘most trusted’ organisations in Ireland.

Apr 10 2021

Ireland’s Credit Unions on target to retrofit 2,000 homes in 2021

By News

Credit Unions secure grant funding support from SEAI for unique end to end survey and finance package

“Credit Unions are best placed to become primary source of finance for nationwide retrofit project”

The Credit Union Development Association [CUDA], which currently runs Ireland’s first end-to-end home retrofit scheme – ProEnergy Homes, has partnered with Retrofit Energy Ireland (REIL) to secure grant funding support from the SEAI and has announced an expansion of the popular scheme, opening it up to all other credit unions.

CUDA report that, such is the demand from participating credit unions, half of the 2021 SEAI €1.5m in grant aid is already allocated, but as part the agreement, it is anticipated that additional funding will be sought in the second quarter.

The Pro Energy Home Scheme was first piloted by CUDA in early 2019 across 20 credit unions and was quickly oversubscribed. The scheme has proven popular as it takes all the “leg-work” away from the homeowner. Homeowners simply fill out an application form with their local participating credit union, after which REIL conducts an assessment on their property and present them with a report.

Kevin Johnson, CEO of CUDA explained why the scheme is so popular with homeowners,

“As the trusted provider of financial services in communities throughout Ireland, credit unions are uniquely positioned to support the delivery of a one-stop-shop model for home energy retrofits.

A national project management firm (REIL) is appointed to oversee all surveys and works, grant funding of up to 35% is available from SEAI for all qualifying works and low-rate financing is made available for the balance of costs through the applicant’s local credit union.  To-date public demand for the scheme through participating credit unions has been strong, demonstrating people’s appetite for a ‘one-stop-shop’ model.

Based on the current level of interest from credit union members and the number of credit unions signing up to the scheme, we’ll need to look for additional funding shortly and can envisaging the annual level of grant application running at €6m – €10m.”

According to Josephine Maguire of SEAI,

“The SEAI recognises that access to finance can be a barrier to residential retrofitting so we are pleased to once again support credit unions in delivering the ProEnergy Homes scheme that provides access to finance at competitive rates to their Members. The SEAI has supported the ProEnergy Homes scheme for a number of years and the one-stop-shop model has proven to be a case study for the delivery of residential retrofitting at the ambitious scale targeted in the National Climate Action Plan.”

Commenting on the partnership, Minister of State with responsibility for Financial Services, Credit Unions and Insurance, Sean Fleming TD said “Credit Unions are uniquely positioned to support retrofitting plans in local communities across Ireland. I truly believe that the expansion of the ProEnergy Homes scheme, and similar schemes, will be a boost for local communities and will help the Government achieve its climate action targets.”

The Pro Energy Home Scheme model combines everything an applicant will need under a simple, unified process including an independent home survey report setting out their options, a dedicated project manager to arrange contractors, quality assurance on the works completed, access to low-rate credit union loans to finance the works.

CUDA say the scheme has now been tweaked slightly in response to the pandemic. Home surveys and works will resume as soon as it is safe to do so, but in the interim, a team of expert project managers and surveyors are available for telephone consultations with interested applicants. The ‘free and no obligations’ call-backs can be requested from www.proenergyhomes.ie and applicants will have the opportunity to discuss all their available options and receive professional advice on any technical questions they may have.

The average amount spent is about €14,000 made up of grant, savings and borrowings. The most popular measures undertaken in 2020 were external wall insulation, new glazing. Multi zone boiler controls also proved very popular. The scheme covers retrofits to a range of energy systems, including attic insulation, external wall insulation, the installation of solar panels, and upgrades to windows, among others.

Mr Johnson added, “Presently, SEAI grants will fund up to 35% of the cost of your retrofit. In our experience of running the scheme, the cost to the average household of bringing their home up to the recommended B2 level rating will cost approximately €30,000 – €40,000. So, just accounting for 35% of that cost through grant aid will leave a bill of roughly €26,000 for works. We recommend homeowners to use some saving to help lower the cost of any additional borrowing to cover the remaining bill, or indeed to cover the full cost of works, depending on how much they have saved. For example, take a cost of €40,000 to get a home to a B2 rating – the 35% grant will cover €14,000, which leaves €26,000 for the homeowner to cover. If they have €10,000 saved – this reduces the amount to be financed by a ProEnergy loan to €16,000.”

Mr. Johnson also welcomed the Governments clear commitment to supporting upskilling and job creation nationally as demand grows for retrofitting projects,

“As community organisations, credit unions are anxious to support local tradespeople. CUDA supports the Government’s announcement of four new centres of excellence to train 2,000 people in retrofit skills[1]. Upskilling existing tradespeople nationally will allow for job creation across the country and will support local economies while ensuring competition keeps prices and exchequer funding to a minimum.”

[1] https://www.gov.ie/en/press-release/16253-minister-harris-announces-four-new-retrofitting-centres-of-excellence/

Mar 01 2021

BoI branch closure decision may see consumers move to Credit Unions in many Irish communities similar to other countries

By News

Commenting on the Bank of Ireland branch closures announced today, 1st March 2021, Kevin Johnson CEO of CUDA (Credit Union Development Association), said

“Today’s announcement will be felt by consumers in many towns and villages throughout the country. While there is undoubtedly a move towards a more digital offering in the financial services sector, there are still a significant cohort of people who are not ready to make that change. The migration of banks to self-service branches has been a difficult transition for many people – particularly older customers, many of whom still favour face to face interaction. However, today has taken this migration one step further, with people in the affected locations no longer being given even the self-service option.

While Credit Unions have made great strides in terms of digital developments, the community ethos means than maintaining a local community presence is integral for the movement. As with Ulster Bank’s planned exit, I believe the announcement today will drive more and more people across the country to becoming members of their local Credit Union so that they can avail of traditional banking through both digital and face to face means, a pattern we’ve seen in other countries including Canada and the USA.”

Feb 19 2021

Many consumers will switch to credit unions following Ulster Bank’s departure – rather than go to the two big banks

By News

Commenting on Ulster bank’s planned exit, Kevin Johnson, CEO of CUDA (Credit Union Development Association, “It’s unavoidable that some banking customers will be badly hit when Ulster Bank exits the market.

Unlike other in countries such as Canada and the USA, Irish consumers have an over-dependence on a couple of large national banks and, as a country, we have traditionally underutilised local banking and credit options.

But it’s not all bad news for consumers – there are options.

The level of development in many Credit Unions in recent years has been strong.  The vast majority of them have substantially modernised their operations and they are now well placed to provide banking and credit facilities to the thousands of personal and business customers impacted by today’s announcement.

While well known for their range of personal loans, most Credit Unions now offer current accounts, business lending, mortgages, Agri-loans, home, life and travel insurance. Reliable and efficient online banking is now the norm and the uptake from members has been strong.

With strengthened governance controls and growing business lending expertise, our representative body CUDA, is currently in talks with the Minister for Finance to amend legislation to allow credit unions to co-lend on larger property related and commercial loans.

While much of Ulster Bank’s customer base may end up with the two pillar banks, we are confident that many consumers will see that credit unions are well positioned to step in and fill some of the void left behind in the Irish banking sector.”

Feb 18 2021

Rumoured exit from Ireland of Ulster Bank

By News

Commenting on Ulster bank’s rumoured exit, Kevin Johnson CEO of CUDA said, 

Consumers are going to be badly hit if Ulster Bank does exit the market; unlike other countries such as Canada and the USA, Irish consumers have been over-dependent on a couple of large national banks and as a country, we have traditionally underutilised local banking and credit options.

The level of development by Credit Union in recent years might surprise many.  The vast majority of them have substantially modernised their operations and they are now well placed to provide banking and credit facilities to the thousands of personal and business customers impacted. While well known for their range of personal loans, most now offer current accounts, business lending, mortgages, Agri-loans, home, life and travel insurances, with a growing number offering Ireland’s only end-to-end home retro-fitting package. Reliable and efficient online banking is now the norm and the uptake from members has been strong.

With strengthened governance controls and growing business lending expertise, CUDA on behalf of its owner credit unions, is currently in seeking the Minister for Finance to amend legislation so that allow credit unions can co-lend on larger property related and commercial loans.

While much of the business of any departing bank may end up with the two largest banks, credit unions are now well positioned to step in and fill much of the credit void left behind.

 

 

Jan 25 2021

CUDA member Credit Unions proud to support the recovery of local businesses including the COVID-19 Credit Guarantee Scheme

By News
  • “Bizfin.ie” a business lending website is being launched to help local sole-traders & businesses access to credit
  • Plumbers, electricians and other sole traders impacted by COVID expected to utilise low-cost loans of €10,000 to €400,000 in some credit unions.
  • Credit unions set to meet face-to-face with all business members to deliver rapid lending decisions

The Credit Union Development Association [CUDA], which commenced its Small Business Lending initiative early 2020, announced today that 4 of its largest credit unions (Capital Credit Union, Credit Union Plus, Blanchardstown & District Credit Union and Dundalk Credit Union) with a combined membership of circa 200,000 are now successfully partnering with Government in the low-cost COVID-19 Credit Guarantee Scheme. The representative body believes that credit unions will succeed in working with micro, small & medium sized businesses, impacted by COVID-19, to review their cash-flow and working capital requirements to enable these businesses to survive, protect jobs, create future employment and thrive in 2021.

The Scheme offers an 80% Government guarantee to participating lenders to provide Irish businesses with access to low interest loans as they respond to the impacts of COVID-19, but take-up has been low for a variety of reasons. Credit Unions believe that some SME’s have been reluctant to take on further debt in this uncertain economy. CUDA acknowledge that credit unions, who were again voted most trusted organisation in 2020  are seen to be more involved in their local communities, a consequence of which is more local business people will be willing to sit down and discuss the merit of them participating in this scheme.

The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar T.D.  today announced the participation of one the largest Credit Union associations in Ireland, the Credit Union Development Association (CUDA) in the Government’s COVID-19 Credit Guarantee Scheme.

The Tánaiste said:

“Irish SMEs will now be able to borrow from Credit Unions under the €2bn Covid Guarantee Scheme. These new providers, from the Credit Union Development Association, have a wide geographical range, from Blanchardstown to Navan.

“Credit Unions are at the very centre of communities across the country. They have an excellent reputation in their local areas and understand the needs of their customers. Their inclusion will help further diversify the options available to small business under this Scheme.”

 

Minister of State at the Department of Finance, Séan Fleming said,

“I welcome today’s announcement that further credit unions, supported by the Credit Union Development Association (CUDA), will be participating in the COVID-19 Credit Guarantee Scheme, bringing the total number of credit unions in the scheme to nineteen. With their unrivalled local knowledge, credit unions are ideally placed to support the recovery and providing loans to local businesses is a key element of the recovery. Further development of SME lending in a controlled manner could also assist credit unions in growing and diversifying their loan book.”

 

Minister for Agriculture, Food and the Marine Charlie McConalogue TD said,

“I am delighted with the addition of credit unions to the COVID-19 Credit Guarantee Scheme. As well as providing a greater choice of lenders for farmers, fishers and food businesses, it will benefit rural communities, which continue to be well-served by the credit union movement. At this time of economic disruption, access to finance is critical to ensuring the ongoing viability of businesses, including those in the agri-food sector and I am pleased that my Department is supporting this initiative.”

The scheme is operated by the SBCI and delivered through the participating finance providers, allowing affected businesses to access additional financing through traditional lenders. 19 Credit Unions with multiple outlets are now participating finance providers in the COVID Credit Guarantee Scheme.

Kevin Johnson, CEO of CUDA commented, “

“As the trusted provider of financial services in communities throughout Ireland, we believe that many sole-traders and small business owners will feel more comfortable dealing with credit unions, particularly where they can receive a fast answer to their credit application. Many of these solid businesses are struggling due to COVID-19 and are now at a point where they need to review their cashflow and credit lines to ensure they are well positioned for a return to more normal business volumes in the second half of 2021.

We have designed the standalone business website, Bizfin.ie, to support this initiative which will be accessible to all business customers of the participating credit unions. They will be able to apply for business loans as well as apply for credit union membership via this site.”

 

 

Ends

 

 

About COVID-19 Credit Guarantee Scheme

The scheme, made available by the Department of Business, Enterprise, Trade & Employment is to support the economic recovery and interested parties can find further information on the COVID-19 Credit Guarantee Scheme here.  Businesses will be required to make two declarations, i] that their turnover or projected turnover has been reduced by 15% as a result of COVID-19 and ii]  that it has a reasonable prospect of returning to viability post Covid-19.  The scheme can provide liquidity finance. It is situated between the shorter term COVID-19 Working Capital scheme and the long-term Future Growth Loan Scheme being offered by the Government.

Businesses need not previously have been clients of a participating provider to apply for lending from those providers. Loans of up to €1 million are available for up to 5.5 years.  No personal guarantees or collateral is required for loans under €250,000. All loans have reduced interest rates demonstrated in the agreement documents with the participating enterprise.

The scheme will be available until the end of June 2021, or until it is fully subscribed.

The COVID-19 Credit Guarantee Scheme operates under the State Aid Temporary Framework introduced in response to the pandemic.

Participating Credit Unions have signed legal agreements whereby the maximum individual loan is set by the Credit Guarantee Amendment Act 2020 and in turn the European Commission State Aid Temporary Framework (Section 25D). This results in the maximum loan been calculated as:

  • double the annual wage bill of the participating enterprise for 2019, or for the last year available
  • 25% of the participating enterprises’ total turnover in 2019; or
  • in limited cases and with appropriate justification, the amount of the finance agreement may be increased to cover the liquidity needs from the moment of granting for the coming 18 months for SMEs.

About CUDA

The Credit Union Development Association was legally incorporated in 2003. In its early days it was the representative voice, on behalf of its owner member credit unions, with legislators and regulators. It has since evolved and now, as well as providing a ‘voice’, it is increasingly providing support facilities in the areas of regulatory compliance, shared services for business supports and digital solutions, as well as providing training & development. CUDA is a credit union owned network that enables member credit unions to engage in beneficial activities which would not have proved possible to do as single stand-alone entities. https://www.cuda.ie/

 

About BizFin

The Business Lending Product being launched in participating CUDA member credit unions was based on their strong desire to to serve another segment of the credit union membership, namely micro, small & medium sized enterprises.    CUDA have recruited the necessary expertise and established a Business Lending Framework, incorporating Risk Appetite & Business Lending Policy Rules.  This is to ensure a consistent and comprehensive assessment within the credit unions.  There is also centralised shared resource available that provides ongoing support on credit assessment, support & expert guidance to assist and give real time advice to the Business Lenders in participating credit unions.  For more information visit BizFin.ie.