IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

Yes

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 20 Dec 2011 | Removal date: 31 May 2018
Still in force

Capital injection and equity stakes (including bailouts)

On 7 December 2011 Ireland notified a scheme for the resolution of credit unions in distress.
 
Credit unions are member-owned, not-for-profit entities whose business primarily relates to savings and loans. Credit unions cannot do business with the general public due to charter limitations; instead they serve a membership that is characterised by a "common bond". The common bond is based on a pre-existing social connection (such as belonging to a particular community, industrial or geographical group). Each credit union is governed by its members. However, it is important to note that while legally credit unions have members, those members are economically equivalent to ordinary depositors.

Credit unions play an important role in the Irish financial sector as they are traditionally seen as providing access to financial services to the financially excluded or the less well-off members of the community. As of June 2011, there were 408 credit unions in Ireland, with savings amounting to EUR 12.2 billion.
 
The scheme is aimed at providing a resolution regime for credit union that are failing or likely to fail and that is effective in protecting the exchequer and stability of the financial system and the economy.
 
The only institutions eligible to participate in the scheme are credit unions. Ireland will provide up to EUR 500 million to fund the scheme.
 
The commission found that the measure constitutes State aid within the meaning of Article 107(1) TFEU and gave the following assessment:
'The Resolution Fund, which will provide the financial incentive for any credit union resolution using a transfer order, is financed up-front by an initial EUR 250 million (with the possibility of another EUR 250 million) contribution from Ireland. Therefore at present there could not be any dispute that State resources are involved. In the future, the Resolution Fund is intended to be financed by levies on all financial institutions. Even then, all the financial means by which the public sector may actually support undertakings, irrespective of whether or not those means are permanent assets of the public sector, remain under public control, and therefore available to the competent national authorities. In this case State resources are involved as the funds come from contributions made compulsory by State legislation and are managed and apportioned in accordance with that legislation, even though they are administered by institutions separate from the State. Ireland does not dispute that position.
Given that credit unions are undertakings active in the financial sector, which is open to international competition, the Commission considers that any advantage from State resources to credit unions would have the potential to affect intra-Union trade and to distort competition.' (par. 36-37 of the letter from the EC to Ireland - Brussels, 20.12.2011 C(2011) 9698 final)
 
The Commission concludes that the measures under the scheme are compatible with the internal market until 30 June 2012. Therefore, since it fulfils the conditions to be considered compatible with the internal market under Article 107(3)(b) TFEU the Commission has decided not to raise objections. (par. 68 of the letter)
 
Update: The scheme was prolonged several times:  

  • On 3 September 2012, the EC approved the first prolongation until 31 December 2012.
  • On 14 December 2012, the EC approved the second prolongation until 30 June 2013.
  • On 18 July 2013, the EC approved the third prolongation until 31 December 2013.
  • On 18 December 2013, the EC approved the fourth prolongation until 30 June 2014.
  • On 2 July 2015, the EC approved another prolongation until 31 December 2015.
  • On 17 December 2015, the EC approved the eighth prolongation until 30 June 2016.
  • On 20 June 2016, the EC approved the ninth prolongation until 31 December 2016.
  • On 19 December 2016, the EC approved the tenth prolongation until 30 June 2017
  • On 5 July 2017, the EC approved the eleventh prolongation until the 30 November 2017
  • On 15 November 2017, the EX approved the twelfth prolongation until 31 May 2018

 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
 

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