Two large Dublin credit unions are in talks about merging, a combination that could create one of largest member-owned lenders in the State.

Core Credit Union, which operates in south Dublin, and Progressive, which covers the vast north county Dublin area from Balbriggan to Ballymun, are discussing a tie up, the Irish Independent has learned.

Progressive hit the headlines a few years ago when it stepped in to fill the void after the forced shut-down of scandal-hit Rush and Lusk Credit Union.

The manager of Rush CU was recently jailed for stealing €875,000 from the lender.

The link-up between Core and Progressive, if it works out, would create a large Dublin credit union that would have a membership of close to 100,000, sources have indicated.

Talks are at an early stage, but it is understood the rationale for the move is to deal with what is seen as the growing regulatory burden that is hugely expensive for credit unions.

Scaling up is also seen as a sensible option as the  income of credit unions, which mainly comes from lending, is facing a squeeze. 

Strong competition in the personal loans market is coming from the likes of Revolut, Avant Money and the three retail banks, while buy-now, pay-later products are also a threat.

Credit unions have the capacity to lend out a further  €2.1bn, particularly for mortgage and business lending, according to the Central Bank.  Just over a quarter of the overall assets of the sector are lent out.

Progressive has assets of around €220m, with Core’s assets at €150m. A combination of the two would create a credit union with assets of €370m.

This would make it one of the largest credit unions in the State. St Raphael's Garda credit union, Savvi in Dublin and St Paul’s Garda CU are larger in terms of asset size.

Both Progressive and Core were created after a string of mergers over the past few years, as the Government and the regulator, the Registrar of Credit Unions in the Central Bank, have encouraged tie-ups.

Six credit unions make up Core. It constituent parts are mad e up of the what were Foxrock and District, Carrickbrennan, Dalkey, Glasthule Dún Laoghaire and District, Sallynoggin/Glenageary, Shankill, and Ballybrack and District credit unions.

Progressive grew out of a series of mergers between the member-owned lenders in Skerries, Donabate, Balbriggan, Howth-Sutton, Rivervalley and Rathingle, Baldoyle-Portmarnock, Clontarf, East Wall, and Fairview.

It operates also in Dublin city and covers Ballymun, Rush and Lusk.

Progressive is run by Sean Staunton, with Core is by headed Michael Byrne, who is also vice-president of the Irish League of Credit Unions. The duo have agreed there will be an open competition for a chief executive of the enlarged group, if the merger goes ahead.

There are also plans to set up micro-branches in places were branches have been closed. Progressive closed branches in Clontarf and Donabate in the past two years.