Ireland - Banks are charging credit unions as much as 65 basis points to keep their money on deposit meaning, for example, a credit union would pay €6,500 for every €1 million it has on deposit.

DUBLIN, Ireland–At least three-dozen credit unions in Ireland have imposed a limit on the deposits members can have, in some cases as low as €15,000, as a result of negative interest rates now in place at the country’s two largest banks.

Ireland

The Irish Times reported it has identified 36 credit unions that have imposed the caps in order to limit any surplus funds they keep on deposit with the banks.

One of the banks, AIB, is charging corporate customers as much as 65 basis points to keep their money on deposit, the Irish Times reported, meaning, for example, a credit union would pay €6,500 for every €1 million it has on deposit.

A spokesman for the bank told the Irish Times it has tried to insulate “the vast majority of our customers from the impact of a sustained period of negative interest rates” but that there were “a relatively small number of larger depositors with whom AIB seeks to reflect the commercial realities of the negative interest rate environment.”

Bank of Ireland is reportedly charging depositors as much as 40 basis points (or a negative rate of 0.4 percent) on short-term deposits, the publication reported.

Credit unions are also blaming the Central Bank–which regulates credit unions in Ireland–for rules they say cut the amount of savings they can accept from members, arguing that for every €100 saved in the credit union, they have to set aside €10 as part of the regulator’s capital requirements.

Savings hit € 13.2 billion in March of this year, up 20% on 2008, while at the same time demand for lending has shrunk, the Irish Times reported. The Irish League of Credit Unions said loan dollars outstanding had declined from €6.4 billion in 2008 to €4.3 billion as of March this year.

See you in Clearwater Beach FL 10/1-4/2019