Central Bank finds weaknesses in some credit unions
Weaknesses have been identified in a number of credit unions as part of a supervisory analysis conducted by the Central Bank.
The difficulties, found as part of the fourth Credit Union Supervisory Commentary Report, were found in a number of risk categories, including governance and credit underwriting.
“We acknowledge that some credit unions have made progress towards addressing prudential concerns,” said Registrar for Credit Unions, Patrick Casey.
“However, it is a concern that we continue to identify weaknesses in core areas including credit underwriting – clearly there is still more work to be done.”
“At a time when so much attention centres on lending capacity, it is essential that credit unions address the fundamental weaknesses identified in these areas.”
The analysis provides an overview of the risk issues that were identified during the process and aims to inform all credit unions on the nature and type of risks identified during Central Bank supervisory activities last year.
Some of the 550 individual problems were recurring, including in fundamental risk areas such as credit underwriting.
The report also details what is expected from credit unions by the supervisor and the bank said it expects all credit unions to consider and act on the findings.
“Given existing commercial challenges facing credit unions and additional challenges presented by COVID-19 and Brexit, it is critical that credit unions maintain strong core prudential foundations,” said Mr Casey.
“Strong governance, risk management and operational capabilities enable credit unions to provide core services to members, while they seek to undertake prudent business model change.”
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