In recent years, Thurles Credit Union (TCU) has experienced a significant increase in the level of savings held by members. In 2018 alone, our savings increased by €7.46 million. Under Central Bank regulations, all credit unions are required to maintain reserves of at least 10% of our assets. Hence, for every €1,000,000 increase in savings, we are required to set aside an extra €100,000. The current negative interest rate climate means that we are being charged by banks to hold some of these funds. While we welcome the display of confidence by our members in our financial strength, we now face the challenge that if savings continue to rise at their current levels, the funds available to pay dividends and the loan interest rebate at year end, may be significantly reduced.
The Board of Directors has therefore taken the difficult but prudent decision to put in place a limit of €50,000 on total savings balances held per member. You should therefore be aware that from 30th June 2019, each member can only have a total savings balance of €50,000 with TCU. Members with total savings of more than €50,000 will be required to withdraw sufficient savings to reduce their savings total below €50,000. Where a member has both a single and joint account with TCU, the maximum combined savings allowed is €50,000 per member (Each member is considered to own 50% of a joint account’s savings balance).
Thurles Credit Union regrets the imposition of this requirement and it will review the situation on a regular basis. The vast majority of our members will not be affected by the changes outlined. I can assure you that your savings remain safe and secure at TCU. We are a financially strong and stable credit union with €13.38m in capital reserves and approximately €121m in assets. We made a surplus in 2018 of €1,534,369. In addition, your savings continue to be guaranteed by the Government Deposit Guarantee Scheme.
Thank you for your continued support which is very important to our continued success. Should you wish to discuss any of the information outlined above, please call our dedicated team to discuss your individual requirements on 0504 91724.
The following is a Frequently Asked Questions piece on the implementation of the Savings Cap:
What is the saving restriction? From 30th June 2019, Thurles Credit Union Ltd (TCU) will apply a total savings limit of €50,000 per member. This means that each member can only have a total savings balance of €50,000 with TCU. If anyone currently has over that amount in savings, they will have to reduce their savings below the €50,000 limit. Members who have less than €50,000 can increase their shares up to a maximum of €50,000. Where a member has both a single and joint account with TCU, the maximum combined savings allowed is €50,000 per member (Each member is considered to own 50% of a joint account’s savings balance).
What about members with savings under €50,000?
If a member has less than €50,000, they are free to increase it to this amount, but not beyond this level. Staff will advise members if they are nearing the limit.
What about members with savings above €50,000?
Members above €50,000 are requested to withdraw funds to comply with this cap by 30th June 2019. Members in this category cannot make lodgements to their accounts until the balance goes below €50,000.
How long will the cap last for? The Board of Thurles Credit Union will keep the savings restriction under constant review, if they make any decision to change the current arrangement members will be notified of this.
Why are you limiting/imposing a savings cap?
In recent years, TCU has experienced a significant increase in the level of savings held by members. In 2018 alone, our savings increased by €7.46 million. Each time our savings increase, we have to allocate more money from our surplus funds to meet the regulatory reserve, therefore reducing the amount we have available to pay out a dividend or loan interest rebate. It also reduces the amount we can afford to invest in new services and new technology options that can benefit all our members. To reduce the impact of this savings growth, the decision was reluctantly taken to limit savings to benefit the greater number of our members.
Will this affect the dividend offered?
For year ended 30th September 2018, TCU paid a dividend of 0.05% (€47,681) and a loan interest rebate of 15% (€430,499) to members. While it is too early this year to determine what rate of dividend or loan interest rebate (if any) we can pay out, we will be communicating with members directly to inform them once we are in a position to do so.
Are my savings safe here?
We can assure you that your savings remain safe and secure at TCU. We are a financially strong and stable credit union with 13.38m in capital reserves and approximately €121m in assets. We made a surplus in 2018 of €1,534,369. In addition, your savings continue to be guaranteed by the Government Deposit Guarantee Scheme up to €100,000.
Does this mean the credit union cannot give out loans?
TCU is in a strong position to give out loans, subject to appropriate assessments being completed. Our ability to lend is in no way affected by the savings cap. We continue to provide valuable loan services to the local community.