Lloyd craig has big plans for British Columbia’s second-largest credit union.
The energetic CEO of Coast Capital Savings, who speaks more like a pep-talking coach than a corporate executive, envisions a day when Coast Capital is part of a credit union group that stretches from coast to coast.

Craig believes the only way Canada’s credit unions can thrive is to tackle the chartered banks head-on. Further bank consolidation is just over the horizon, he says, and to meet that challenge, credit unions, too, must consolidate.

For Craig, 60, who guides the organization from the top floor of a modest four-storey building in Surrey, B.C., the initial step in that long journey is preparing Coat Capital for its first expansion outside B.C.’s borders. The 300,000- member credit union now has 45 branches throughout the Lower Mainland, Fraser Valley and southern Vancouver Island.

In recent years, there have been numerous mergers within the B.C. credit union system and in other provinces. During his time, Craig has seen the province’s credit unions shrink to 53 from 125. In fact, the story of B.C. credit unions and Craig’s career path have often shared the same pages. Now he is convinced it is time to take credit union consolidation to the next level, which means expanding interprovincially.

“In this country, credit unions are the second tier behind the banks. But, organizationally, we’re still fractured,” he says. “Imagine the potential of joining some of these fractured parts together into a national brand.

“That’s why we’ve built up Coast Capital and designed it to take us outside of B.C.,” he adds. “Frankly, we’re doing this because we haven’t seen any real leadership elsewhere in the country to take credit unions to this next level.

“That’s always frustrated me, but I must admit it has stimulated me as well,” he says with a smile.

Craig’s track record is testimony to the fact
that he is up to the challenge. He has always been prepared to take risks.

The New Westminster, B.C., native has been in the province’s credit union system for almost 20 years, and he has spent most of his career stepping out on the leading edge of change. Once, he even fell off.

After graduating from Washington State University in 1968 with a B.A. in business administration, he began his banking career with Mercantile Bank of Canada in Vancouver, with subsequent stops in Calgary and Regina.

One of Craig’s superiors at Mercantile Bank was John Cleghorn, who went on to lead Royal Bank of Canada. It was Cleghorn who, in 1974, sent the 29-year-old Craig down to Los Angeles to open a branch office.

It was a turning point, Craig recalls: “It was a great experience because it taught me that if you want things to happen, you have to make them happen yourself.”

Craig spent 15 years honing his skills at Mercantile Bank, then moved to Surrey Metro Savings Credit Union, at which, in 1986, he became president and CEO.

It didn’t take Craig long to see that Canada’s traditional credit union system and its small-town co-operative nature was going to have to move with the times if it was to survive the growing power of chartered banks.

In 1992, he took a bold step by turning Surrey Metro into a publicly listed company.
About five years later, Craig made an even bolder move by sitting down with Canada Trust and talking merger. To say that Surrey Metro’s members gave that proposal a thumbs-down in 1999 is an understatement, and much of their wrath was aimed at Craig.

“Some of our members were ready to lynch me,” he says. “The town-hall meetings we held to talk about the proposal were packed with very angry people. It was brutal.”

In the end, the public shareholders
approved the merger, but Surrey Metro’s membership turned it down. “That taught me that if you want to change things too rapidly, you’ll get slapped around,” Craig says, “and that change is the toughest thing you can do.”

That public lashing would have been the undoing of many CEOs, but not Craig. It was, he says, a great learning experience that created a more refined executive risk-taker.

As Craig was emerging from the Canada Trust episode, Coast Capital was formed in 2000 when Victoria-based Pacific Coast Savings merged with Richmond Savings.
Two years later, Coast Capital merged with Surrey Metro and Craig was appointed to the top job.

@page_break@However, it has taken almost three years to meld Coast Capital and Surrey Metro because it has been done carefully, with a specific purpose in mind. “Everything here has been designed for expansion, and nothing has been built that isn’t scalable,” he says.

That includes three groundbreaking initiatives that Coast Capital has taken on its home turf this year:

> a branch concept called “Aperio,” in which teller counters, velvet ropes and stanchions have been tossed aside in favour of a system in which staff and customers work side by side;

> a “no worry mortgage” in which the rule book used by most banks and credit unions has been “thrown out” in favour of more liberal lending, especially to new immigrants and young working professionals;

> free chequing and debt accounts. Coast Capital is the first financial institution in Canada to offer these complimentary services.

Craig says the initiatives are all risks, but they’re calculated risks designed to increase market share, expansion and, hopefully, persuade Ottawa that it has to amend the Bank Act to allow credit unions the same jurisdictional freedom as banks.

To that end, Craig says, Coast Capital is already searching for an out-of-province credit union partner. “Our finding such a partner would be a start in showing Ottawa that we’re serious about this,” he says.

Craig is convinced that inter-provincial expansion for credit unions will come via changes to the federal Bank Act. He says he’s tired of waiting for the provinces, which regulate credit unions, to help.

Three provinces — B.C., Alberta and Ontario — have reciprocity legislation that allows their credit unions to expand in the other two provinces, but haven’t yet written the enabling regulations.

Coast Capital’s first merger step outside B.C. will probably be into Alberta, Craig says, but he declines to get into specifics. If that works, he adds, Coast Capital will seek other mergers across the country.

Ironically, Ottawa’s recent signals that it may allow bank mergers could help Coast Capital with its expansion vision. “I find it hard to believe Ottawa would allow the banks to merge and become a greater competition for us without allowing credit unions to expand interprovincially as well,” he says.

“Sure it will be risky,” he adds. “But not taking risk is the biggest risk of all.” IE