State aid - 13th prolongation of the Irish Credit Union Resolution Scheme 2018
On 25 May 2018, the European Commission (Commission) concluded that the prolongation of an Irish scheme for the orderly winding-up of credit unions is in compliance with EU state aid rules, and in particular with the Commission's 2013 Banking Communication. The objective of the scheme is to safeguard financial stability when a credit union (i.e. a nonprofit financial cooperative whose members can borrow from pooled deposits at low interest rates) becomes unable to meet regulatory requirements. It allows Ireland to provide certain 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 while ensuring that no buyer gains an undue economic advantage through the acquisition of under-priced assets and liabilities. Ireland has made a special sector-funded resolution scheme available to those credit unions, which has been used three times since its establishment. The scheme has been prolonged until 30 November 2018 (it was initially approved in December 2011 and has been prolonged twelve times since then).
Comment: The EU State aid rules are designed to prevent Member States from granting selective economic advantages to undertakings (unless the Commission has approved the aid in advance or there are no other exemptions available for such aid). This prolongation is a further example of the financial crisis that profoundly affected the banking sector in Ireland and the on-going relevance of the State aid rules in that sector in Ireland.
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Date published: 29 May 2018