Dominion Bond Rating Service says a possible merger of credit union centrals is a logical step.

The rating agency reports that it has reviewed the announcement that Credit Union Central of British Columbia and Credit Union Central of Ontario have entered into formal discussions towards the creation of a single entity, combining all of the two centrals’ operations other than trade association services.

“Should discussions be successful, the new national entity, which would include the pre-existing liquidity pools and credit union lending operations, will initially be owned by the two centrals although other provincial centrals and financial co-operative associations have been invited to participate in the national entity as well,” it explains.

DBRS says that it views this initiative as, “a logical course of action to create a stronger, more capable and potentially more efficient central organization, which will be better suited to serve the systems’ needs as credit unions become larger and more sophisticated.”

The potential for completion of a deal, timing and final structure of any future agreement remain highly uncertain, it adds. “However, DBRS believes this action will not have an impact on the ratings of either Central.”