Nenagh Credit Union introduces savings cap
Nenagh Credit Union is introducing a savings cap of €20,000 per member effective from April 1st 2021.
This cap will not be applied retrospectively, so members hold what they have. Members who currently have €20,000 or more in the Credit Union can leave these funds in the Credit Union but cannot add to them. Members who currently have less that €20,000 in the Credit Union can continue to make lodgements until the balance reaches €20,000.
Nenagh Credit Union is the latest Credit Union that has been forced to introduce a savings cap due to the costs associated with holding deposits from a reserves perspective, the current negative interest rate environment, and the ongoing low return on investments, which is expected to remain in place for the coming years.
Pat Naughton, CEO of Nenagh Credit Union, said, “This was a difficult decision and one that was taken after much consideration but we believe that is the right one in the current environment. We have seen a growth in members’ savings of €7.2 million in the past financial year and, while we welcome this show of confidence and loyalty from our members, it does bring certain cost challenges.”
Mr Naughton continued, “Credit unions are required by regulation to hold 10% of members’ savings in a regulatory reserve. This means that for every €100,000 deposited with the Credit Union, €10,000 has to be set aside in the reserve account. This is a significant cost to the Credit Union. When you add in the current low interest rate environment, where we are being charged negative interest rates on funds on demand, and the current low return on investments, the cost impact on the credit union is further increased.
“I want to assure our members that their savings are safe with Nenagh Credit Union. We are a financially strong and well capitalised Credit Union, but it is important that we take the correct decisions today to protect, grow and future proof Nenagh Credit Union for generations to come,” Mr Naughton added. “In addition, savings in Nenagh Credit Union are guaranteed by the Government Deposit Guarantee Scheme up to €100,000.
“Our focus is to continue to enhance the services available to all members and to grow our loan book. We are very much open for lending with a competitive suite of lending products available and a dedicated lending team, who will provide our members with a personal service. We also have some exciting new loan products, which will be introduced in the coming months. We will continue to develop our online banking facilities, which provide greater access for our members.”