Wexford Credit Union made the national news today, including RTE's Drivetime for all the wrong reasons. The €154m credit union which has €137m of local savings cannot pay a dividend due to losses on its Anglo Irish Bank subordinated bonds and bad debt provisions.
It was forced to write off 80% of its 2.9m Anglo Irish Bank investment which it appeared to have made as far back as 2004. This money was invested in one of the bank's many subordinated bond issues which were bought out at 20% with haircut of 80%.
At the same time it seems the credit union, which does not publish its accounts on its web site, has made provisions for bad debts of an additional €5m coming from its reserves and income for the year. It would seem bad debt provisions have jumped to close to €7m which is somewhere close to 9% of its €85m loan book.
With its agm scheduled for next week 15th December in the Talbot Hotel it seems the board and management will have some tough questions to answer. At the very least they should provide a detailed note of all investments including their current market value and value at maturity along with a detailed list of all investments held.
Quoted in the Irish Times, the credit union's manager said:“The €2.99 million investment in subordinated Anglo bonds represents 4 per cent of our total investment portfolio but we would like to assure our members that we hold no other subordinated bonds in any other Irish banks.” If the 4% is correct then it means the credit union has an investment portfolio of €75m. So where is the other €72m invested and what risks have members savings been exposed to?
Whatever else its 33,000 (or is it 28500?) members will probably be unhappy they are not being paid a dividend this year - many may rue not having their savings with one of the local banks who are paying some quite attractive rates.