€70k savings limit introduced at credit union

St Anthony’s & Claddagh Credit Union, Mainguard Street.

One of Galway’s largest credit unions has introduced a savings limit of €70,000 per member for new savings.

St Anthony’s & Claddagh Credit Union, which has three Galway branches, introduced the cap as of January 1, this year, following the 2016 AGM last December.

The new limits, which will have no impact on existing savings accounts, have been introduced due to Central Bank restrictions on where credit unions can invest their surplus cash.

The average member of the credit union has savings of less than €5,000, and according to St Anthony’s & Claddagh Credit Union, this new limit will affect less than 0.3% of its membership.

The limit of €70,000 was chosen by the credit union, which has branches in Westside, Oughterard and Mainguard Street, “in an effort to be fair to all members”.

It was necessary to introduce it because banks are now imposing negative interest rates on money deposited by credit unions.

That move by the banks would have impacted on credit union members, and the credit union has moved to address that ‘negative interest rate’ issue.

In a statement, St Anthony’s & Claddagh Credit Union, explained the decision.

“Under Central Bank guidelines the Credit Union must hold 10% of assets in reserves. This means that for every €1 million in savings the Credit Union must hold €100,000 in reserves. Reserves can only be funded from the annual surplus earned.

“Surplus is earned from savings by lending it to members at a fair and reasonable rate and investing any money not lent out in low risk investments in line with Central Bank guidelines. Examples of such investments are government bonds and deposits with authorised institutions including Irish regulated banks. As interest rates remain low some banks are now imposing negative interest rates.

“Credit Unions have always been known for their personal service and commitment to the community. People appreciate this and on a practical level they have demonstrated their loyalty to the Credit Union by continuing to save with the Credit Union.

“In 2016 savings with St Anthony’s & Claddagh Credit Union, grew by almost 5% to circa €170m. The challenge for us is how to manage these savings. If there is a negative return on the investment of these savings then the dividend and interest rebate of all members will be affected,” it said in a statement.

It added the new limit, “will be kept under review by SACU. If conditions change and an adequate surplus can be earned from additional savings then that limit will be reviewed.”

As well as providing savings and loans services to its members. St Anthony’s & Claddagh Credit Union has a long history of supporting the community. Its three branches have 43,000 members. Alongside €200m in assets, it employs 45 people and has 22 volunteers.