The cost to the taxpayer for the bailout of Newbridge Credit Union (NCU) may be some way off the €53.9m provided for by the Central Bank.
That is according to new figures provided by the Minister for Finance Michael Noonan.
In November 2013, the Central Bank appointed Permanent TSB to take over NCU and provided a State fund of up to €53m to make good the losses at the credit union.
The takeover was the result of poor lending decisions by NCU and it avoided an immediate liquidation of the union under which members would not have had access to their money and some — such as schools who kept deposits there — risked a loss of funds.
The transfer of the financially troubled credit union to PTSB was approved by the High Court, following an application by the Central Bank.
At the time of the transfer, NCU had about 32,000 deposit accounts and 7,000 loan accounts.
In a written Dáil response to Fianna Fáil’s Michael McGrath, Mr Noonan said that part of the €53.9m includes €24.7m to cover costs resulting from all loans being written off with nothing recovered.
However, Mr Noonan said that if the loans performed well, the Central Bank may have no liability under this heading or could actually be paid by PTSB.
He said: “Given the performance on the loan book to date, the Central Bank expects to incur some costs under this heading, although nowhere close to the capped amount.”
In the bailout, Mr Noonan confirmed that €23m was in cash up front.
He said part of the projected €53.9m cost included €4.25m for restructuring and integration costs.
Mr Noonan said the restructuring costs capped at a possible €3m are there to cover the establishment and maintenance of a recovery and underwriting platform for the NCU loans.
He said: “To date, €1.3m has been drawn down. The Central Bank expects to incur a further circa €0.2m in such costs.”
On the integration costs, Mr Noonan said these are capped at a possible €1.25m.
“To date, nothing has been drawn down, but the Central Bank expects to incur the full €1.25m allocated to integration costs.” he said.
The €53.9m figure also included €2m under the heading of transferring liabilities payments that are there to cover liabilities transferred to PTSB that were unknown at the point of transfer.
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