When Veteran Banker Don Rolfe begins his new job as chief executive officer of Vancouver-based Credit Union Central of B.C. on Feb. 15, he knows he’ll be taking the plunge into a very large fishbowl. That’s because Rolfe is stepping into his new post at one of the most crucial points in Canadian credit union history.

After decades of being regionally based, Canada’s credit union sector, which administers more than $100 billion in assets for more than four million clients coast to coast, is moving toward centralization in the form of a new organization to be called Central 1 Credit Union. In addition to Rolfe’s new role at B.C. Central, he will be the inaugural CEO of the new entity, which will initially amalgamate B.C. Central and Mississauga. Ont.-based Credit Union Central of Ontario. Both serve as the central banks and trade associations for member credit unions in their respective regions.

Once the British Columbia-Ontario amalgamation is completed under Rolfe’s leadership, he’ll begin the second phase of his new assignment, which is to bring other provinces into the Central 1 organization, thus creating a truly national credit union system that will be large enough and strong enough to compete with Canada’s chartered banks.

“Ultimately, we want to be in a position to support credit union needs right across the country,” Rolfe says, “because the market is there. Currently, about one in three Canadians deals with a co-operative financial institution in one way or another.”

Rolfe brings both credit union and banking experience to the task. He is currently president and CEO of Vancouver-based Credential Financial Inc. , the Canadian credit union system’s wealth-management distribution company, as well as CEO of Ethical Funds Co. , which manages socially responsible mutual funds out of a head office in Vancouver.

Before joining the national credit union system about five years ago, Rolfe held senior positions with CIBC, Royal Trust and Royal Bank of Canada over a span of about 25 years.

“My first task is to oversee the merger of the B.C. and Ontario centrals,” he says. “But once this merger is consummated, we’ll then determine what opportunities exist to expand the role of the new Central 1 to other province’s credit union centrals.”

Rolfe thinks the timing is right. “We see this strategy as a logical progression that’s coming at an opportune time,” he says. “Being able to compete actively with the big banks and to be a strong alternative to them is now absolutely critical to our success.”

The proposed merger of the B.C. and Ontario centrals, which was approved by both organizations’ members in June 2007, was initially announced in October 2006. Under the new banner, Central 1 will provide payments, treasury, Internet banking and trade services to more than 200 credit unions in B.C. and Ontario for some 2.7 million members. With offices in both Vancouver and Mississauga, Central 1 is expected to begin its operations within the year; it will start off with more than $7.4 billion in assets under administration.

If all goes well in the early days, Rolfe hopes that Central 1 can expand into a fully national organization within three to five years.

However, between now and then, he admits, there’s a lot of work to do. He stresses that the provincial credit union organizations other than B.C. and Ontario will be watching Central 1 closely to assess how it is living up to its billing as an entity that can improve the sector’s competitiveness by providing a wide range of banking services at the national level.

“The first thing we have to do is establish Central 1’s credibility,” Rolfe says. “Any time you bring two organizations together, all eyes are on you. So, it’s important to have some early successes. If you don’t create that initial trust and credibility, then the other provincial centrals will adopt a wait-and-see attitude instead of getting on board.”

In other words, how the other provincial centrals see Central 1 in the short term will be critical to Central 1’s long-term success.

“At first, I think the other centrals will simply observe us to see if the benefits we’ve outlined are being achieved in B.C. and Ontario,” Rolfe says. “If those benefits are achieved, then that will effectively put us in a position to have serious discussions with the other provinces, although my sense is that the other provinces are already keenly interested.”

@page_break@But even if Central 1 achieves its goal of becoming a coast-to-coast organization, it will still be much smaller that the chartered banks, which collectively control about $2 trillion in assets, Rolfe notes.

“So, even though we’ll be bigger than today, we’ll still be relatively small,” he says. “For example, Royal Bank of Canada’s assets are somewhere in the neighbourhood of $600 billion. But we’ll certainly be of a size that we’ll be able to compete effectively.”

Rolfe is unconcerned about a possible merger among the big chartered banks; he feels that as long as there’s a minority government in Ottawa, a chartered bank merger will remain on the shelf.

And if such a merger does happen, there could be an upside for the credit union sector. “Even if we see a bank merger following a majority government in Ottawa,” Rolfe says, “it could create some opportunities in the marketplace because, from a competitive perspective, I think a bank would be required to sell off some of its assets.”

Trimming expenditures has no place in the B.C.-Ontario credit union merger or in the creation of Central 1, Rolfe says: “There has to be an absolutely clear understanding by everyone involved that this will be a growth-orientated, ‘go forward’ strategy, not a cost-cutting strategy. As far as I’m concerned, nobody has ever shrunk themselves into greatness.”

He’s aware that the individual credit unions in B.C. and Ontario will also be watching closely to see how Central 1 takes shape and if it lives up to its billing. “In both provinces,” he says, “the [credit union members] have expectations that we’ll have to live up to as well.”

Meanwhile, Rolfe will also keep a close eye on the organizations he’s leaving while the search for replacement CEOs begins for both Credential and Ethical Funds: “I’ve committed to providing appropriate support to both those organizations as part of the transition phase.”

Rolfe expects both those posts to be filled by the end of the first quarter of 2008. IE