A new Central Bank levy on credit unions will have a devastating impact on the lending institutions which will be forced to hike their rates significantly and some may face closure or amalgamation.
The Central Bank announced plans to increase the Industry Funding Levy on credit unions from approximately €1.5 million per annum to €7.8m by the end of the 2021 for the 240 credit unions in the country.
The League of Credit Unions carried out a survey on the likely size of the hike for small, medium and large organisations. The levy is based on asset size of the credit union on the day it pays.
Small credit unions like Arainn which has assets of less than €5m paid in the region of €1,500 last year – that will increase to €3,000 this year, €5,000 in 2020 and over €7,000 in 2021.
The credit union in Inverin which has assets of €50m paid around €3,500 last year. The levy will shoot up to €17,500 by 2021.
Larger unions such as St Columba’s and St Anthony’s in the city – which have assets of €135m and €185m respectively – paid €14k in 2018 but will have to pay €30,000 in 2019, €52,000 in 2020 and €74,000 in 2021.
See full story in this week’s Connacht Tribune.