Savings Limit Notice

Ballinasloe Credit Union recently carried out a strategic review of its members savings position and have reluctantly taken the decision to introduce a savings limit of €30,000 per member with effect from 01st February 2020.

Members who hold more than €30,000 with Ballinasloe Credit Union can maintain their current savings balance but will not be able to increase it.

Should future withdrawals bring the savings balance below €30,000 at any stage, the limit will apply to future lodgements, so that the overall member savings balance remains at or below €30,000.

Members with less than €30,000 can continue to save up to the new limit of €30,000.

In the past year the total amount of member savings has increased by 6% from €100m to €106 million. While this savings increase underlines the confidence our members have in the Credit Union, it also adds significantly to our overall cost base both in terms of increased regulatory levies, insurance costs and the required allocations to reserves.

Ballinasloe Credit Union currently lends out 40% of all monies saved by members. The other 60% is invested in bonds and bank deposits and the return on these has fallen dramatically over the last few years and continues to fall.

If the current rate of savings growth were to continue, more of our surplus will have to be channelled into meeting the regulatory and other associated costs. This will limit the Boards ability to propose dividends or invest in new products/ services for members.

Your Credit Union is committed to continually improving member products and services. By introducing the savings limit the board is attempting to maximise the surplus available for investment in new products and services and to support the sustainable growth of the Credit Union into the future.

If you are unsure of what these changes mean for you, please refer to our website www.ballinasloecreditunion.ie where we have a frequently asked questions segment.

Alternatively, you can contact Ballinasloe Credit Union directly by phone on 090-9643179 or talk to us in branch.

Frequently Asked Questions

Are my savings secure with Ballinasloe Credit Union?

Your savings in Ballinasloe Credit Union are very secure and are backed by strong assets and performing loans. In addition, your savings continue to be guaranteed by the Deposit Guarantee Scheme which guarantees all savings in financial institutions for amounts up to €100,000.

Why are you introducing a savings limit?

Total savings in Ballinasloe Credit Union are growing by around 6% per annum and now stand at €106 million. While the savings increase shows that members have great confidence the Credit Union, it also means we have a growing amount of surplus funds. Under Central Bank regulations, we must maintain our non-distributable statutory capital, at a minimum of 10% of total assets – so for every additional €100,000 of savings lodged, we must allocate €10,000 from our surplus to our capital reserves.
The negative interest rate climate also means that Ballinasloe Credit Union is effectively being charged by banks to hold the portion of our member funds necessary to meet our liquidity requirements.
The rising costs and low interest rate environment limits the Boards ability to propose dividends or invest in new products and services for members. By introducing a savings limit the Board are attempting to maximise the surplus available for distribution to members or to invest in new products /services and support the sustainable growth of the Credit Union for its members.

What is the saving limit?

The limit applies to the total amount a member can have in savings in Ballinasloe Credit Union. The limit is based on the member, not the account. So, each member is limited to a maximum of €30,000 savings, whether they are in a single account, joint account or a combination of both Members with less than €30,000 can continue to save up to the new limit of €30,000. If a member currently has over €30,000 in savings, they will not be asked withdraw funds.

What about members with savings currently above €30,000?

Members with savings above €30,000 will not be asked to withdraw their funds. Members in this category cannot make lodgements to their accounts and will be advised accordingly that we will not be accepting any further lodgements to their account(s) if their total savings remain above €30,000. There is no restriction on members withdrawing funds from their account.

What if my savings are pledged against a Loan?

If you have savings pledged against a loan, the savings limit will still apply. You will not be allowed to increase your savings balance above €30,000.

How many members will this affect?

The savings limit will directly affect members with savings in excess of €30,000. Members in this category cannot make lodgements to their account(s) until such time as the balance in their savings is below €30,000. There is no restriction on members withdrawing funds from their account.

How long will the limit remain?

Given the current and projected future challenging climate of increased regulatory levies and historically low returns on investments the savings limit will be in place for the foreseeable future. The Board of Ballinasloe Credit Union will keep the savings limit under constant review, if a decision is taken to change the current arrangement you will be notified directly of this.

Will this affect my dividend and Interest rebate?

The dividend and interest rebate are decided upon on a year by year basis at the Annual General Meeting. The amount of surplus will determine what amount is available for dividend/rebate. By introducing a savings limit, we are attempting to maximise the surplus available.

Does this mean the credit union cannot give out loans?

Ballinasloe Credit Union 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 limit. We continue to provide valuable loan services to the local community.

Does this mean the credit union is in difficulty?

No, this has no bearing on the day to day operations of the credit union. Ballinasloe Credit Union is adequately capitalised with total reserves of €17 million and assets of just over €124 million.

Each time our savings increase, we must allocate more money from our surplus funds to our regulatory reserve, thereby reducing the funds we have available to pay out by way of dividend or loan interest rebate. It also reduces the amount we can afford to invest in new services and new technology options that can benefit all our members. To reduce the impact of this savings growth, the decision was taken to limit savings for the long-term benefit of our members.

What do I need to do next?

  • If you intend to leave €30,000 in your account, please remember you will be unable to lodge any further funds into your savings account until your savings balance is less than €30,000.
  • Please review your transactions especially if your Credit Union savings are approaching €30,000. You may need to cease these transactions or redirect them to another account.
  • If you have any direct debits, credit transfers, standing orders set up to come into your Credit Union savings account, you are advised to review your account. You may need to reduce your current share balance so that these electronic lodgements will not result in your savings exceeding the €30,000 savings cap.
  • If you are affected by the introduction of the Savings limit, please contact us by phone on 090-9643179 by email at info@ballinasloecreditunion.ie or talk to us in branch.