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

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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.”

Consumers already switching to credit unions

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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.

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

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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/

Rumoured exit from Ireland of Ulster Bank

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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.

 

 

Central Bank provides update on the financial condition of the credit union sector

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It is welcomed to see that the Central Bank of Ireland (CBI) acknowledged the effectiveness of credit unions in maintaining continuity of services for their members during the ongoing pandemic, and that the sector has shown a level of resilience in 2020.

Commenting on the CBI release, Kevin Johnson, CEO of Credit Union Development Association (CUDA) stated, “Growing savings and a muted demand for credit are not challenges unique to the Credit Union sector, or indeed, to Ireland. Credit Unions have redoubled their focus on serving people with lending needs and also generating non-interest income.

Credit Unions that have digitised their loan marketing, membership and application processes have fared far better during the pandemic, with some seeing little or no reduction in overall loan volumes. Similarly, those Credit Unions that have signed up to the end-to-end home retrofit scheme ProEnergy, from the Solution Centre, are helping the high number of people investing in their homes over the last few months.

A collaboration of Credit Unions, led by CUDA, have weathered this storm better than many, by using digital innovation as a means of reaching a broader audience, by addressing market needs with schemes like the home retrofit initiative, and introducing new value products for people that also generate income for the credit union (home, life and travel insurance).

If Credit Unions are to maintain their strong capital position, further innovation will be required and CUDA are advocating specific reforms and improvements to facilitate serving more lending needs and also ways to facilitate members savings in a safe environment.  CUDA are urging the Government to consider permitting Credit Unions to introduce their members to State Savings, where savings are placed directly with the Irish Government.  This would alleviate the capital pressure for Credit Unions, as the savings would no longer be on their balance sheet, while allowing them to continue to deliver important services to their members.  We are also seeking legislative change to support the introduction of co-lending which would enable a group of Credit Unions to share the risk for some of the larger loan opportunities.”

Kevin Johnson, CEO of CUDA (Credit Union Development Association)

New lending rules will finally allow Credit Unions to compete

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Survey – 3 out of 4 (77%) Consumers believe Credit Unions should compete more aggressively with Banks

  • Some credit unions poised to double or triple loan book size as a result of rule changes to longer-term loans
  • Credit unions disappointed at limited permission to become a key business loan provider and to support Government Housing Schemes

CUDA believes that the new rules which aligns the volume of loans a credit union can issue to their asset size is fundamental, and could enable many credit unions to double or treble their lending in certain loan classes.

Credit unions can and should ‘take on the banks’, according to more than 70% of Irish adults in a recent survey, commissioned by CUDA and conducted by iReach. The majority (74%) of adults believe that credit unions could make a bigger impact and should collaborate to compete with the banks.

Kevin Johnson, CEO of the Credit Union Development Association (CUDA), commenting on the new rules issued by the Central Bank of Ireland today, said  “Up until now the level of loans the credit union should give out was based on the percentage of loans already issued. This was holding credit unions back from providing more loans to support their members and their communities. Now the volume of loans will be based on a percentage of assets of the credit union. With an average of just 28% of assets currently lent out, the Regulations will allow many credit unions to do more loans for more people.

CUDA has persistently lobbied for these changes since 2015 and are delighted that these changes will bring much needed competition to the market for mortgages, home renovations and business loans”.

“We look forward to providing the wider range and higher volume of loans now permitted under the new rules and welcome the Regulator’s commitment to re-evaluating these limits as the sector evolves in these areas of lending. In particular CUDA believes credit unions are ready and willing to help do more in filling the void for business loans left by the banks”.

Kevin Johnson went on to express disappointment that credit unions will be prohibited from supporting aspects of Government Housing Policy such as the Repair and Leasing Scheme. There is no logic, he said, to prohibiting credit unions from providing much needed loans to their members who want to help rebuild Ireland through the Repair and Leasing Scheme. Kevin further expressed disappointment with the limit on the number of business loans a credit union can do in a time when many credit union members who are small businesses are crying out for funding.

CUDA is committed to getting solutions to these issues and will speak directly with the Department of Finance, Department of Housing and the CBI on these matters.

Kevin concluded, “It’s very encouraging to find that 59% of people aged between 18-34 either agreed or strongly agreed with the perception of credit unions being ‘dynamic and innovative’. We have made huge effort and investment in recent years to develop our work in line with advances in technology through our innovation hub, the Solution Centre. In the past three years we have introduced new lending products and these new limit rules from the Central Bank will allow us help credit unions further develop. Our Digital Marketing adverts reached 2.74m people so far in 2019, creating over 18,000 loan leads with a value of €102m. We are committed to broadening the appeal and relevance of the credit union movement among younger generations, and to making our services as accessible as possible, to as many members as we can, both old and new.”

-ENDS

 

CUDA Welcomes CUAC Report

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 CUDA welcomes CUAC report

 Modernising Credit Union Lending rules will deliver real value in mortgages and personal loans

The representative body for Credit Unions CUDA has welcomed the publication of the CUAC report which reviewed the implementation of the recommendations in the Commission on Credit Unions.

Commenting on the findings, Kevin Johnson, CEO of CUDA, “The report highlights the long overdue need to review the current credit union lending limits. Modernising these will deliver better value for consumers in personal loans, mortgages and other financial services areas, something that the Government acknowledges is sorely missing in our economy.

We are also pleased to see our call has been listened to – we have long been advocating for a change in the outdated long-term lending limits to more accurately reflect consumer demands and the current financial environment”.

CUDA has also strongly campaigned for changes to be implemented that will allow Credit Unions to immediately provide funds for social and affordable housing, thereby helping to meet the serious supply problems facing prospective home buyers.

Kevin went on to explain, “Fundamentally, Credit Unions offering a full range of account and financial services, from personal loans to mortgages and savings to pensions, will drive greater competition. This will lead to lower cost products which can only be good for all consumers and which is all but absent from the market at the moment. We look forward to working with the proposed Implementation Group to make this a reality.”

The representative body say that an aspect of the report that struck them was that “the need for leadership at the centre and an understanding of the risks involved in longer-term lending were flagged by the Central Bank as areas of concern for credit unions seeking to move in this direction.”

Kevin commented, “This is something we are firmly behind and we have made great strides in this regard with the establishment of the “Solution Centre” which facilitates collaboration, innovation and business development”.

The Solution Centre, which is open to all credit unions, comprises a selection of the country’s strongest credit unions and is a hothouse unit developing specialist products, supports and solutions.

Kevin went on to say, “We have already delivered a number of projects that were drawn from the objectives of participating Credit Unions strategic plans. One of the first of these products will be supporting a mortgage offering which is expected to be available in August to participating credit unions representing approximately 25% of credit union members”.

CUDA says the report also correctly acknowledges the great work of all stakeholders which is resulting in ever strengthening Credit Unions.

Kevin concluded, “We thank the CUAC for the thoughtful consideration they have given to our proposals. Credit Unions continue to grow their market share of the consumer loan market and, now with strong capital, stronger governance and greater capabilities, they are fantastically positioned to broaden the range of services they offer to current and potential members”.

CUDA Training and Development Calendar 2016

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The CUDA Training and Development Programme for 2016 includes a number of targeted areas for Boards of Directors, Board Oversight Committees, Management Teams and Credit Union personnel.  All of the programmes are devised collaboratively between CUDA and experts in the field to ensure the content is specifically designed to support Credit Unions in the current challenging environment.

CUDA encourages participation from both member and non-member Credit Unions at all training events, thereby providing a valuable opportunity for networking and knowledge sharing. Leadership development for Boards of Directors, Board Oversight Committees and Management Teams, all mandatory training requirements and training events specifically designed for Credit Union Staff are all included in the 2016 CUDA Training and Development Programme.

Download the CUDA Training & Development Programme for 2016