A credit union has folded hitting 2,600 members.

The Castle and Minster Credit Union, based in Huddersfield, has been struggling after more than 40 years of trading.

And today Kirklees Council has confirmed the credit union has closed for good after directors decided the business was no longer viable without further external help.

It has entered into voluntary insolvency and liquidators will now be appointed.

But all savings are protected and will be paid back to members.

Castle and Minster chairman Andy Young said the decision was a last resort and after a bid for further support to Kirklees Council was turned down.

Last December Kirklees Cabinet pledged £200,000 in a sub-ordinated loan deal; however Kirklees has now confirmed the money has not been handed over.

My Young said: “This is an incredibly sad day, and is not a reflection of the current staff and board of the credit union.

“We have just had a profitable quarter, but the historic debts which have been part of the legacy of previous boards and officers just could not be reconciled to the satisfaction of auditors and the board of directors.

“I want to thank the current staff for their hard work in trying to keep Castle and Minster open, and generate new income, which we were on track to deliver.

However, without a further loan, we cannot overcome the previous financial issues.”

In December Kirklees Cabinet members agreed to a subordinated loan which could be drawn down over two years, which was made with little guarantee or expectation that it would be repaid. To call on the money the credit union had to meet certain conditions, which it was unable to do so no money was transferred.

The home page of the credit union’s website says: “The Castle and Minster Credit Union is no longer trading.

“The decision to close down Castle and Minster, by entering into a voluntary insolvency agreement, was taken with great sadness by the board members.

“We would like to thank you for your support over 40 years, and while we have done everything possible to avoid this outcome, in discussion with our regulators we felt there was no other viable solution.”

People with savings in the credit union have up to £85,000 protected under the Financial Services Compensation Scheme.

Kirklees says all members will receive the full value of their savings, in most cases in the next two weeks.

Anyone with a loan agreement will still need to repay it and liquidators appointed will contact those with outstanding loans in the coming weeks.

The credit union, based in the Byram Arcade, was an ethical savings provider for people who live and work in Kirklees.

But it has been struggling for some time – membership dwindled from 8,000 members in 2011 to just over 3,000 members currently. In 2013 it scaled back its services by reducing its opening hours and counter service, and it introduced a 75p charge for members to withdraw money.

Each credit union is an independent enterprise, and the decision to close Castle and Minster Credit Union has no bearing on any other credit unions.