Initiative Ireland’s new partnership will allow credit unions to lend to Approved Housing Bodies 6th January, 2021
Sinead Byrne and Padraig Rushe of Initiative Ireland: the start-up plans to ramp up activity this year in both Ireland and Britain. Picture: Harrison Photography
When Pádraig Rushe launched Initiative Ireland three years ago, his aim was to level the playing field in property lending, allowing ordinary people to co-fund social and affordable housing.
Since then, Initiative Ireland has financed more than €25 million in loans. Now, under a new partnership with the Credit Union Development Association, it is preparing to launch a fund that will allow credit unions to lend to Approved Housing Bodies (AHBs) nationwide.
Credit Unions occupy a special place in the hearts and minds of Irish people.
While financial institutions generally experienced something of a fall from grace in the years after the financial crash, credit unions continued to maintain their status as a trusted community pillar.
Indeed, for six years running now, the credit union has claimed top place in a survey of brands based on their customer experience carried out by the CX Company. They re locally based and run by a voluntary board and are generally staffed by local people who know their members, said Ed Farrell, CEO of the Irish League of Credit Unions (ILCU).
CREDIT unions have seen a massive surge in saving by members since the Covid crisis began.
Savings levels are now at a five-year high, but the sharp rise in savings, at a time when lending demand is low, is putting huge strain on the sector.
Members have collectively put an extra €1bn in savings into the member-owned institutions.
Average member savings have increased by 7pc from €4,400 to €4,700 in the year up to September, the Central Bank said in its latest review of the State’s 229 trading credit unions. This is despite a growing list of credit unions imposing limits as low as €10,000 on member savings in a bid to stem the flow of funds being put into them.
Cana’s surplus for this year will all to go into its reserves instead of to members.
It already has bumper reserves of €11.05m for 2019 against shares of €63.84m, and loans of €27.84m.
Although dividend payments have declined to little or nothing in recent years, many credit unions pay a small dividend and a larger loan interest rebate. Rebates of 10pc of the interest paid in a year have not been uncommon.
This would mean someone who paid €500 in interest in the year would be a refund of €50.
Credit unions affiliated to the Irish League of Credit Union only allow a rebate if a dividend is also being paid.
Q: I have some savings with my local bank and some more in the credit union. A few years ago, I used to get some interest on these savings in the bank and a dividend from the credit union at Christmas.
Now I get nothing and am reading in the media that they may charge me to look after my money. Surely, this can t be true?
A: There has been a move by lenders to extend the categories of business customers who will be charged for saving money, according to the chief executive of the Credit Union Development Association (Cuda) Kevin Johnson. This is to be done by changing account holder s terms and conditions to enable banks to charge what is termed negative interest. It has led to fears that personal banking customers may be next in line to face such charges.