BRUSSELS, Belgium (5/20/13)--Representatives from the European Network of Credit Unions (ENCU) and World Council of Credit Unions (WOCCU) met with European Union (EU) policymakers in Brussels on May 14-15 to advocate for several issues affecting European credit unions.
European Network of Credit Unions representatives who met with policymakers in Brussels included, from left: Anne Schneider, Policy Action; Breege-Anne Murphy, Irish League of Credit Unions (ILCU); Michael Edwards, World Council of Credit Unions; Ed Farrell, ILCU; Brian McCrory, ILCU; Pawel Grzesik, National Association of Cooperative Savings and Credit Unions (Poland); and Matt Bland, Association of British Credit Unions Ltd. (Photo provided by the World Council of Credit Unions)
The issues include: Reasonable interpretation of Basel Committee liquidity rules; the U.S. Foreign Account Tax Compliance Act (FATCA) and related European rules; and the provision of basic current accounts to the unbanked in order to promote financial inclusion.
Regarding the Basel liquidity rules, the ENCU group met with the European Commission to urge that credit unions' deposits at banks be treated similarly to other depository institutions under the Basel "Liquidity Coverage Ratio."
Although credit unions are not subject to the ratio, Irish commercial banks have told Irish credit unions they are being classified as "non-bank financial institutions"--a category that applies to non-depository institutions--for purposes of draft European liquidity guidance. That means banks are cutting the yields they will pay on credit union demand and term deposits, said WOCCU.
This treatment under the EU's Basel liquidity rules may cost the Irish credit union movement as much as $74.4 million a year in lost income unless EU regulators clarify and grant credit unions more favorable treatment, the group said. ENCU representatives will talk to the European Banking Authority on the issue this week in London.
"We believe that there has been some level of confusion regarding classification of credit unions for Basel liquidity purposes in Ireland and possibly other member states," said Michael Edwards, WOCCU vice president and chief counsel. "We will continue to engage European authorities on this issue to seek an outcome that is satisfactory for credit unions."
ENCU members also met with European Commission representatives about the impact of FATCA on EU credit unions as it relates to European data protection regulations and the likely upcoming tax information-sharing amendments to EU directives that will create what some have called a "European FATCA."
Though the European Commission envisions the European FATCA will focus on tax information sharing within the EU, it also expects the Paris-based Organization for Economic Cooperation and Development to establish a global version of FATCA, which would apply to credit unions in all, or most, jurisdictions worldwide.
ENCU members also asked commission members to consider credit union-friendly rules on basic current accounts for the unbanked. The measures would allow credit unions to continue outreach to underserved individuals without creating undue regulatory burdens. Representatives also discussed with policymakers the EU's upcoming directive on deposit-guarantee schemes and forthcoming revisions to the EU's anti-money laundering directive.
ENCU is a network of national credit union associations in Europe and WOCCU 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.