Winnipeg Free Press - PRINT EDITION
Prairie credit union giant near
Deal currently being finalized that will see unity by next year
By: Geoff Kirbyson
9/04/2010 1:00 AM |
Comments: 0
The credit union centrals of Manitoba, Saskatchewan and Alberta are finalizing a deal that would see the trio merge by early next year.
Those close to the negotiations say the move is being driven by the changing landscape of financial co-operatives, which have been consolidating and growing at increasing rates in recent years.
Garth Manness, CEO of the Credit Union Central of Manitoba, said with fewer but larger credit unions in each of the three provinces than ever before, it's becoming more difficult for them to perform their roles. (Credit union centrals are the trade associations and service providers to individual credit unions within their provinces.)
"The gap in size between the smaller and larger credit unions is growing and the gaps in their needs are growing, too. We're finding it more difficult to meet the needs of small, medium and large credit unions together. We believe we'd have greater capacity (for servicing them) if we came together as a Prairie entity," he said.
Large credit unions, for example, may want more sophisticated services or need more liquidity to take advantage of lending opportunities that are above their deposit levels. Smaller institutions are more likely to need things like human resources consulting services.
All three centrals have received overwhelming preliminary support on the merger strategy and all will vote on the final plan at some point later this year. If it passes in all three provinces, the decision will then be made where the Prairie Central -- that's the working name -- will be located and who will run it.
As with all mergers, there will be some job losses. Manness said he expects about 10 per cent of the CUCM's 100 jobs and 350 across the three provinces, to be eliminated.
The three Prairie centrals have gone to school on the experience of their counterparts in B.C. and Ontario, which merged in the summer of 2008 to form Central 1 Credit Union, said Graham Wetter, president and CEO of the Alberta Central. The centrals in Nova Scotia, New Brunswick and Prince Edward Island have previously announced their merger plans, which should close before the end of the year.
He said just because one of Winnipeg, Regina and Calgary will be chosen for the head office doesn't mean there won't be a significant on-the-ground presence in the two other cities.
"That's very important. Legally, we'll have to have a head office designated but it's certainly not an indication that a whole bunch of jobs are going to move (to one city)," he said.
Keith Nixon, Regina-based project office chairman of the Prairie Central Initiative, said the proposed merger has been in the works since the summer of 2008. He said by becoming a better service provider to its members, credit unions in the three Prairie provinces will be better positioned to grow their market share at the expense of the Big Six banks.
"The three centrals have been working for quite a number of years on various partnerships. This was seen as a natural way to come together for future positioning," he said.
The CEO of the largest financial co-operative in Manitoba, the Steinbach Credit Union, said he's in favour of Prairie Central.
"We think it's a good thing. I think there are a lot of services that are duplicated in other provinces and if we can take the duplication out and cut expenses, we can pass the savings on to our members in the form of better rates," said Glenn Friesen.
He said the centrals are looking to follow the consolidation lead set by their credit unions.
"There is a lot of merger and acquisition activity in the industry. The credit union system is doing quite well and growing. We have come a long way in the last number of years. We're nowhere near as big as the banks but we can do virtually anything the banks can do," he said.
geoff.kirbyson@freepress.mb.ca
Give them credit
If credit unions across Manitoba, Saskatchewan and Alberta approve the merger of their respective centrals, the resulting body will represent a powerhouse group of co-operative financial institutions. Here's how the credit union systems across the three provinces stack up:
Alberta Saskatchewan Manitoba Total
Members 640,625 497,701 566,001 1.7 million
Assets $17.49B $13.48B $15.85B $46.8B
Credit Unions 46 65 44 155
Branches 215 310 184 709
Republished from the Winnipeg Free Press print edition April 9, 2010 B4