Following due consideration and deliberation, the Board of Directors of Rathkeale & District Limited has reluctantly decided to introduce a cap of €30,000 on shares and are also introducing a cap on the amount a member may lodge to €3,500 per month in the credit union effective as of 01/07/2020. This decision was taken in the best interest of all members of the credit union.
It is important to note that members who already have more than €30,000 can leave their shares in place but cannot increase their balance. Members with less than €30,000 can increase their shares to €30,000 but no more than that amount. The Board will keep these arrangements under constant review.
The rationale behind introducing the cap is as follows:
- Our total savings have grown to €51 million. Against this, our total loans stand at €8.6 million, which means we have a rapidly growing amount of surplus funds.
- Under Central Bank regulations, we must maintain our statutory capital at a percentage of our total assets. In practical terms, this means that for every additional €100,000 of savings, we have to allocate €10,000 from our surplus/profits to our Capital Reserve.
- This can have the effect of depleting the amount available to pay a dividend at year end. It also reduces the amount we can afford to invest in new services and new technology options that can benefit all of our members.
To reduce the impact of this, your Board is trying to limit the growth in savings in order to benefit the greater number of our members. Thank you for your understanding in this matter. I would like to reassure you that Rathkeale & District Credit Union is a secure and strong credit union and that this decision was not taken lightly. This will affect less than 3.5% of our membership.