Central 1 credit union, which provides wholesale financial services to credit unions in British Columbia and Ontario, and Credit Union Central Alber-ta, which does the same for financial services co-operatives in that province, have announced they will begin discussions toward a possible merger.
A combined credit union central for B.C., Ontario and Alberta — should the two CUCs decide to merge — would create a giant CUC, representing roughly 70% of credit union customers and assets under administration in the system nationally, outside Quebec.
“It’s not far from being a game-changer,” says Don Rolfe, president and CEO of Vancouver-based Central 1, of the possible merger.
A bigger Central 1 that includes the Calgary-based CUC Alberta, Rolfe says, would represent a critical next step toward the ultimate goal of eventually establishing one national CUC to represent the entire system.
(Quebec’s caisse populaire system, which is served by Lévis, Que.-based Desjardins Group, is structured differently and is larger than the credit union system in the rest of Canada. Although Desjardins and the credit union system outside Quebec co-operate on many initiatives, a merger of the two systems is considered to lie further in the future, if at all.)
CUCs provide wholesale funding, manage liquidity and offer group clearing and payment services to credit unions, among other services, in the provinces they represent. The trend toward mergers on the CUC level mirrors the trend of mergers among the credit unions themselves.
“Given where credit unions are evolving, and the increasing complexity and demands they have,” Rolfe says, “there is a need for consolidation among the centrals in order that they be not only sustainable but have a value proposition that helps credit unions meet current and emerging market needs.”
A merger between Central 1 and Alberta Central, say Rolfe and Graham Wetter, president and CEO of CUC Alberta, could help both organizations realize efficiencies, enhance services and lower borrowing costs in terms of securing funding.
Central 1 itself was created only three years ago, when the B.C. and Ontario CUCs combined. Earlier this year, four provincial CUCs in Atlantic Canada had merged to create the Halifax-based Atlantic Central.
CUC Alberta had been discussing a merger with the CUCs in Saskatchewan and Manitoba up until last year, when the finance department of Alberta’s provincial government scuttled the deal, says Wetter. He says the provincial regulator objected to how the proposed Prairie Central would be incorporated, and had a few other issues with the potential merger.
Before announcing the current talks with Central 1, CUC Alberta had entered into lengthy discussions with its provincial government to test the idea of a possible merger with Central 1 as a concept, and to bolster the chances that any proposed merger would pass muster.
A combined CUC Alberta and Central 1 would continue to have a fully staffed office in Calgary, Wetter says, and would strengthen the ability of credit unions in Alberta to meet the needs of the province’s credit unions.
“Centrals do the volume business in the background — we don’t need to be unique or different by marketplace,” Wetter says. “We are here to maximize efficiency for the credit unions, which can then continue to be responsive to their local markets.” IE