Charleville Credit Union liquidation - Clonmel Credit Union had opted out of merger talks in March

Charleville Credit Union liquidation - Clonmel Credit Union had opted out of merger talks in March

The County Cork credit union that went into liquidation today had been in talks with Clonmel Credit Union about a possible merger.

However following disquiet among members at the proposed move, Clonmel Credit Union opted out of any merger with Charleville Credit Union.

A joint statement last March said: "Clonmel Credit Union and Charleville Credit Union entered into exploratory talks in late 2016 to determine if there was a business case for a strategic alignment which would benefit members of both credit unions, and lead to a stronger combined entity. 

"These discussions were subject to a confidentiality agreement. Both Boards were confident that a combined entity would have been in the best interest of all our members. 

"At this stage a comprehensive due diligence review had now been completed. However the two credit unions did not reach agreement on the finer details of a post merged entity and have now made the decision not to proceed with the proposed transfer of engagements."

The Central Bank has made an application today to the High Court to have provisional liquidators appointed to Charleville Credit Union Limited. 

David O'Connor and Jim Hamilton of BDO were appointed as joint provisional liquidators.

However the former Board of Charleville Credit Union has expressed its "dismay" at the action of the Central Bank.

"It is our view that liquidation was entirely unnecessary," the former board said in a statement. 

"There have been no recent issues in Charleville Credit Union which justified such draconian action," the statement said.

The Central Bank said that Charleville Credit Union is in breach of a number of regulatory directions and is in a distressed financial position.

 It said that if it had not taken this action, it believed there could be a "disorderly failure" of Charleville Credit Union.

 The winding up of the credit union was in the public interest, the bank added.

It also emphasised that members' deposits up to €100,000 are protected under the Deposit Guarantee Scheme. The Charleville Credit Union has 12,000 members.

The Central Bank said it believed "all feasible options" available to the credit union to raise and maintain its reserves at the levels required by law have been exhausted.

The Registry of Credit Unions has been engaging with Charleville Credit Union over a number of years seeking remediation of the weaknesses in its financial position. 

"The Central Bank is of the view that the inability of the credit union to address its reserve position, despite previous receipt of external funding, has resulted in it being necessary to apply for the winding up of the credit union," it said. 

"This course of action will incur large costs to the taxpayer in liquidator's fees. We fail to see how this expensive course of action is appropriate or necessary," it added.