Transfer of Engagements / Due Diligence Reporting

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The Credit Union sector is currently going through unprecedented change in its 50-year history due to the economic environment Ireland finds itself in today. These changes will affect all Credit Unions in the country on every level to include:

  • Financial Reporting
  • Regulatory Strategy & Supervision
  • Operational Activities
  • Future Strategy

These changes will no doubt create a stronger movement for the benefit of the Credit Union membership, which currently stands at in excess of 2 million members.

The Registrar of Credit Unions, Mr James O’Brien at the 2011 Credit Union Regulatory Forums noted that there are serious issues affecting the Credit Union movement, such as:

  • Current and potential future losses to investment portfolios
  • Continued sharp increase in loan arrears and bad debts
  • Falling loan interest income
  • Static cost / overhead base
  • Downward pressure on dividend
  • Static or falling membership

In our opinion, all of above will cause a number of Credit Unions to fail.

In the aftermath of last years stress testing, loan book reviews, section 35 amendments and increased requirements for statutory reserve provisioning, the Financial Regulator is moving more and more Credit Unions into the high-risk category and onto a supervisory watchlist.

The Registrar is on record in stating he wants to see a smaller number of Credit Unions with branch offices, as opposed to in excess of 400 autonomous Credit Unions governed by individual Boards of Directors. Therefore in the next 2 – 5 years the sector will see a significant number of mergers and transfer of engagements, which will be either voluntary or compulsory.

If your Credit Union is considering a merger or transfer of engagement, WDA have a developed the expertise and skillset to assist the Credit Unions in this regard, having advised on a number of these transactions in the past.

We produce a comprehensive tender document for the Boards consideration, which reproduces a full schedule of Due Diligence tasks that must be completed within the engagement. This will ensure there is absolutely no ambiguity to the scope of the engagement.

All professional fees are agreed between WDA and the Credit Union prior to the commencement of the engagement at a mutually agreeable level, so there is no hidden surprises or overruns.

WDA will then produce our independent report and present to the board for full / detailed consideration and discussion. When completing transfer of engagement / merger, it is important that our report is considered over a number of weeks. We then always schedule a follow-up meeting with the board after dissemination of the report to allow further questions, to ensure the board make a fully informed and considered decision.

Should you require additional information or a consultation please call us on 01 6771411 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it