With the widespread media coverage of the introduction of Credit Union Saving Caps, we here at Roscommon Credit Union wanted to reaffirm our position relating to saving restrictions for our members.
In recent years, Roscommon CU has experienced an unprecedented level of growth in member savings. In some instances we have witnessed members withdrawing large sums of money from other financial institutions and placing these funds in their Credit Union account. While we welcome this strong show of confidence in our financial strength and loyalty from our members, this can have a negative effect on new service and product provision and ultimately reduce our ability to effectively service our member needs.
The decision to introduce a saving cap almost two years ago was taken with due consideration and deliberation by the Board of Directors with the decision to introduce a saving cap of €25,000. This decision was taken in the best interests of all our members. The saving restrictions currently affects a small proportion of Roscommon Credit Union members.
Why a Savings Cap?
Tighter regulatory requirements by the Central Bank of Ireland and the costs charged by banks to hold our members savings on deposit are the main contributory factors for the introduction of a saving cap.
Under Central Bank regulations, we must maintain our statutory capital at a percentage of our total assets. In practical terms, this means that for every additional €100,000 of savings, we have to allocate €10,000 from our surplus/profits to our Capital Reserve. This greatly impacts our ability to invest in new services and products for our members. It can also negatively impact the amount available to pay a dividend at year end.
Negative Interest Rates greatly impact our ability to hold shares over €25,000 per member account. The current rate of return offered by banks is still negative. This means every time we lodge money in excess of the saving cap, interest is not earned, instead Roscommon Credit Union is charged a fee by the banks for the holding of these excess funds.
What is the saving restriction?
Roscommon Credit Union Limited has capped the amount of savings per member account to €25,000.
Does this mean I have to take money out of the credit union now?
The credit union now has a saving restriction of €25,000 per member account. This means that each member can only have €25,000 on deposit with the credit union. If anyone currently has over that amount in savings, we would ask that you withdraw the excess funds to ensure your account meets the €25,000 saving restriction. Members who have less than €25,000 can increase their shares to €25,000 – but no more than that. Joint members can transfer funds to each other to bring their accounts under the €25,000 limit.
How long will the cap last for?
The Board continues to keep the savings restriction under constant review, if there is any change to the decision to amend the current saving cap, you will be notified of this.
Does this mean the credit union is in difficulty?
No, this has no bearing on the day to day operations of the credit union.
Will this affect my dividend?
Last year Roscommon Credit Union Limited paid a dividend of 0.01%. While it is too early this year to determine what rate of dividend or loan interest rebate we will be in a position to pay out, we will be communicating with members directly via our Annual Return to inform members once we are in a position to do so.
Are my savings safe here?
Please be assured your savings remain safe and secure at Roscommon Credit Union Limited. We are a financially strong and stable credit union with €4.8m in capital reserves and €35.6m in assets.
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?
Roscommon Credit Union Limited 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 offering great value, flexible loans. If you are in need of a loan please feel free to talk to us about how we can help you, call 090 6626657 alternatively email email@example.com and check out our online loan calculator for great low interest rates https://roscommoncreditunion.ie/loan-enquiry-form/
If you have any queries relating to your account and the savings cap please call us on 090 6626657, alternatively Email: firstname.lastname@example.org
Thank you for your understanding in this matter. Please be assured that we continue to innovate and work hard to ensure that Roscommon Credit Union Limited remains strong and viable, while offering exceptional personal service, products and services that meet our member needs.