DEPUTY Willie O’Dea has warned that the renegotiated terms of the EU/IMF with the coalition government could seriously hurt local credit unions.

“The changes brought about by the new deal means amalgamation, which could lead to the closure of scores of credit unions around the country,” said the former minister. “We agreed that we were going to look at the situation, each credit union would be assessed to see which of them needed capital.

“However, this was changed by the new government and a stress test will now be performed on the sector, that could lead to the amalgamation and closure around the country”.

In December, an agreement on the credit union sector was brokered between Fianna Fail and the EU/IMF.

However, on entering office, the Fine Gael-Labour government changed the terms and carried out an extensive stress test of the credit union sector.

The new plan is to obtain necessary powers to promote consolidation through mergers and offer financial support, if warranted.

The Government is also set to establish a commission of credit unions to design a strategy for the future evolution of the sector, having regard to its particular nature.

By the end of the year they plan to help credit unions with tougher regulation.

Originally, Fianna Fail had agreed a three-pronged approach, which included a full assessment of their loan portfolios.

They planned to put together a comprehensive strategy to enhance the viability of the sector and draft legislation to strengthen and stabilise credit unions.