Credit Unions Meet with EU Authorities on Basel III Fix, Consumer Protection

November 25, 2013

European Network of Credit Unions members visited the European Banking Authority in London last week, including (left to right) Martin Sisk, Irish League of Credit Unions (ILCU); Ed Farrell, ILCU; Anne Schneider, Policy Action (Brussels); Breege-Anne Murphy, ILCU; Wiktor Kaminski, National Association of Co-operative Savings & Credit Unions (Poland) (NACSCU); Michael Edwards, World Council; Pawel Grzesik, NACSCU; Andrus Ristkok, Estonian Union of Credit Cooperatives; Brian McCrory, ILCU; Eleonora Zgonjanin, FULM Savings House (Macedonia); Florin Simion, Federation of Romanian Credit Unions; and Matt Bland, Association of British Credit Unions, Ltd.
LONDON — Representatives from the European Network of Credit Unions (ENCU) and World Council of Credit Unions met with European Union (EU) policymakers in London and Brussels last week to discuss how to limit the Basel III liquidity rules' negative impact on credit unions. ENCU and World Council also met with EU authorities about consumer protection and taxation issues affecting credit unions in Europe.

Representatives from all six ENCU member organizations—Association of British Credit Unions, Ltd., Estonian Union of Credit Cooperatives, Federation of Romanian Credit Unions, FULM Savings House (Macedonia), Irish League of Credit Unions and National Association of Co-operative Savings & Credit Unions (Poland)—met with the European Banking Authority's (EBA) Regulation section in London on Nov. 21 to ask the EBA to consider establishing a credit union-specific liquidity classification under the EU's European Basel III rules in order to reflect that credit unions' deposits in banks are generally "sticky and stable" even during times of economic stress.

ENCU representatives met with the European Commission in Brussels on Nov. 22 regarding the Basel III rules to make the same request.

Credit unions' deposits in European banks currently are classified under Basel III as "wholesale funding." The "wholesale" classification assumes that most or all of these deposits would be withdrawn during periods of economic stress, even though European credit unions significantly increased their deposits in banks during the global financial crisis that began in 2007.

Banks must hold increased reserves for "wholesale" deposits compared to the reserves required for "small business" or "retail" deposits. These higher reserve requirements increase the banks' cost of funds when doing business with credit unions. These new costs have resulted in Irish banks reducing the yields they pay on credit union deposits by an average of 1.5% and also have contributed to some banking institutions in Great Britain ceasing to accept credit unions' deposits at all.

World Council and the Irish League met with the Basel Committee on Banking Supervision in September regarding the classification of credit unions' deposits in banks under the global Basel III liquidity rules.

"Application of ‘wholesale funding' classification for credit unions' deposits does not reflect the actual behavior of credit unions' bank deposits. This EU correction of the Basel III interpretation will ensure that credit unions can continue to deliver financial inclusion in Europe," said Brian Branch, World Council president and CEO.

ENCU members also met with the EBA's and the European Commission's Consumer Protection sections on Nov. 21–22 concerning upcoming EU directives and guidance papers on mortgage lending, payment accounts and other payment services.

In addition, ENCU met with the European Commission's Tax section on Nov. 22 to discuss implementation of the United States' Foreign Account Tax Compliance Act (FATCA) and related EU and Organisation for Economic Co-operation and Development (OECD) initiatives concerning automatic exchange of tax information about credit union members who are neither a resident nor a citizen of the jurisdiction.

ENCU is a network of national credit union associations in Europe and World Council representatives who educate and engage with EU policymakers and other stakeholders on legislation that affects credit unions. ENCU was formally established in 2010 and is based in Brussels. Learn more at

World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented 300+ technical assistance programs in 89 countries. Worldwide, 68,882 credit unions in 109 countries serve 235 million people. Learn more about World Council's impact around the world at

Organization: World Council of Credit Unions
Phone: (608) 395-2000