DUBLIN— Ireland’s Central Bank will introduce “targeted but significant” changes to its regulatory lending framework for credit unions, expanding their ability to lend to households and businesses, the Law Society of Ireland said.
The reforms, effective Sept. 30, follow a review of credit union lending and a public consultation. They include separate concentration limits for home and business loans — 30% of total assets for home lending and 15% for business lending, the Law Society reported in a post.
The report noted the Central Bank, which regulates credit unions in Ireland, said the new limits will boost the sector’s combined lending capacity for these categories from €2.9 billion to €9.9 billion.
“The changes also allow limited lending for non-principal residences and remove certain underwriting and board reporting requirements,” according to the report.
‘Appropriate Guardrails’
Mary-Elizabeth McMunn, the Central Bank’s deputy governor for financial regulation, said the updated framework aims to help credit unions grow sustainably “within the appropriate guardrails” and in the long-term interests of members.
“It is our expectation that credit unions planning to avail of the changes will do so in a phased, prudent, and sustainable manner,” McMunn was quoted by the Law Society as saying.
Skills Building Needed
She added that institutions must continue to build the skills, expertise and risk management needed for expanded lending.
McMunn also warned that “enabling regulations alone are not enough” and urged credit unions to seize the opportunity to strengthen their role in supporting members, communities and the wider financial sector, according to the Law Society.
