State aid: EU Commission approves prolongation of Irish credit union resolution scheme
The European Commission has found the prolongation of an Irish scheme for the orderly winding-up of credit unions to be in line with EU state aid rules, in particular with the 2013 Banking Communication. The objective of the scheme is to safeguard financial stability when a credit union becomes unable to meet regulatory requirements. It allows Ireland to provide aid for transferring the assets and liabilities of a failing credit union to an acquirer through a competitive process. This will help to achieve the maximum value for the assets and liabilities, ensuring that the aid is limited to the minimum necessary for an orderly winding-up, and that no buyer gains an undue economic advantage through the acquisition of under-priced assets and liabilities.
Credit Unions are small financial institutions that are not covered by the Bank Recovery and Resolution Directive (BRRD). Ireland has chosen to make a special sector-funded resolution scheme available to those credit unions, which has been used only three times since its set-up. The scheme is prolonged until 31 May 2021. The Commission initially approved the scheme in December 2011. It has been prolonged fifteen times since then, the last time in June 2019. More information will be available on the Commission’s competition website, in the public case register under the reference SA.57378.