EC approved, under the EU State aid rules, the ninth prolongation of an Irish scheme aimed at restructuring credit unions. The scheme was initially approved in October 2014 and last prolonged in November 2018. The objective of the scheme is to underpin the stability and long-term viability of credit unions and the credit union sector in Ireland at large. This authorization is granted until October 31, 2019.
The restructuring involves merging of credit unions with ample reserves with credit unions with a gap, providing, if necessary, a capital injection to make up any shortfall in the capital reserve requirements of the merged credit union. Stabilization involves assisting fundamentally viable credit unions that have temporarily slipped below the regulatory reserve requirements. EC found that the measure ensures that the beneficiaries become viable in the long-term through restructuring or merging with sound credit unions and that they contribute to the cost of restructuring. Moreover, the impact on competition is limited because credit unions are small and do business only with members. Until now, the Irish authorities have managed to restructure credit unions without granting any aid under this scheme.
Related Link: Notification
Keywords: Europe, Ireland, Banking, Restructuring, State Aid Rules, Credit Unions, EC
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