The credit union centrals of Manitoba, Saskatchewan and Alberta are hoping to create a Prairie powerhouse.

The trade associations and service providers to credit unions in the three provinces have been working behind the scenes for more than a year and a half to create a business plan for a merger. If the plan receives the necessary votes from the member credit unions, the merger could take place early in 2011.

Garth Manness, CEO of Winni-peg-based Credit Union Central of Manitoba, says that with credit unions merging at an alarming rate to bulk up in their ongoing battle against the big banks for market share in the retail and small-business markets, it becomes more difficult for the centrals to provide a broad spectrum of services.

“Large credit unions may want more sophisticated services or need more liquidity because they have lending opportunities that are above their deposit levels,” he says. “Smaller institutions are more likely to need things like human resources consulting services.”

Graham Wetter, president and CEO of Credit Union Central Al-berta in Calgary, agrees. He says the Prairie Central — that’s the working name for the merged entity — will have the financial clout to support the borrowing needs of credit unions.

“We’re the lender. With three provinces combined, our capacity to do that is much greater,” Wetter says. “We can also go externally into public capital markets, if we need to, in order to support credit union growth.

“It’s very important for the centrals to be capable of serving some of these very large credit unions that are emerging,” he adds, “but also to be able to service everybody else. Our view is [the merger] serves both purposes very well.”

A number of major decisions won’t be made until after a vote has been taken on the proposed merger later this year, such as where the head office will be based, who will lead it and what the new entity will be called. Those decisions will be made by its newly minted board, which recently elected four directors from each Prairie province and held its first meeting.

Wetter says it doesn’t matter where the head office ends up being — there will be a significant employee count in Calgary, Regina and Winnipeg. However, it is anticipated that new efficiencies and economies of scale will allow the three centrals now in business to reduce their current combined employee count of about 350 by 10%.

Keith Nixon, project office chairman of the Prairie Central initiative in Regina, says he’s very confident of getting the green light from the credit unions in all three provinces. In preliminary votes held late last year, credit unions in Manitoba voted 87% in favour of the concept, while their counterparts in Saskatchewan and Alberta were more than 90% in favour.

Nixon says the three Prairie centrals are following the lead of their brethren in Ontario and British Columbia. Those credit unions merged almost two years ago to form Central 1 Credit Union. The Nova Scotia, New Brunswick and Prince Edward Island centrals are planning to finalize their own merger before the end of this year.

Al Morin, CEO of Assiniboine Credit Union, the second-largest financial co-operative in Manitoba by asset size with $2.7 billion, says the biggest issue for him is how the central can service the giants of the sector. Assiniboine and Steinbach Credit Union, he notes, are both bigger than the Manitoba central.

“It’s about being relevant [for the centrals],” Morin says. “If the larger credit unions end up getting services outside of their central, how long can the centrals afford to continue offering services to the smaller credit unions? If the credit unions are at such a size that they can have the consulting or agriculture services in-house, that jeopardizes the offering to smaller credit unions. It’s a double-edged sword.”

Not only is Morin in favour of the Prairie central, he believes an even bigger merger may be in the cards — to create a national central: “Absolutely, that’s really the move afoot. The credit union system is a roots-based organization and [the Prairie merger] is one evolution that will see the formation of three centrals [across the country]. I believe within the decade, it will evolve to one central.”

Ian Rea, CEO of Regina’s Conexus Credit Union, agrees. He says the centrals were established at a time when there was a very large number of small credit unions.