Credit unions consider merger

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This article was published 01/12/2023 (669 days ago), so information in it may no longer be current.

The trend regarding credit union mergers in Manitoba continues.

Assiniboine Credit Union, Westoba Credit Union and Caisse Financial Group are now in the initial stages of officially “exploring” the possibility of combining their operations.

ACU is the largest of the three — with more than $6 billion in assets — after having merged with Vantis, Astra and Entegra over the past 15 years.

Officials from the three all speak about shared visions for the future and an appreciation of the cost of operating financial institutions in the changing financial landscape.

Jim Rediger — CEO of Brandon-based Westoba, with assets of about $1.5 billion — said, “At the end of the day, members want and deserve more from their financial service provider. We want to be in a position to provide that as well as for our staff.”

Over the last five years, the number of credit unions in Manitoba has decreased from 65 in 2000 to 16 as of this past summer.

Kevin Sitka, the CEO of ACU, has been through a few such mergers already and is confident about the benefits that can accrue.

“We’re seeing a lot of change within our industry with new demands that could be better addressed with greater scale,” he said.

Those changes include growing regulatory requirements, greater competition overall, the need for greater investment in technology as well as evolving member and employee needs.

Among other things there is a growing move to open banking — defined as banking practice that provides third-party financial service providers open access to consumer banking, transaction, and other financial data from banks and non-bank financial institutions through the use of application programming interfaces.

Earlier this month, dozens of tech leaders sent a letter to Finance Minister Chrystia Freeland arguing that Canada is falling behind as an increasing number of countries move ahead with open banking systems designed to increase competition.

“Open banking in Canada is long overdue,” said Nicholas Schiavo, director of federal affairs at the Council of Canadian Innovators and one of the signatories.

The merger process has just begun and much work still has to take place before management presents a business case to the respective boards of directors of the three credit unions.

They will then seek approval from the respective memberships which is not expected until the first or second quarter of next year and a final merged entity not likely to materialize until 2025.

The management groups do not take anything for granted, but not surprisingly they are encouraged at the prospect of the combination.

“All three partner are excited about the same things and share the same vision for the future,” Sitka said.

There is no determination yet as to what the name of potential merged entity will be called. After the transactions that saw Vantis, Astra and Entegra merge with ACU, it is only the ACU brand that has survived.

According to the Canadian Credit Union Association, as of last September, ACU was the 15th largest in the country. Access Credit Union — which merged with Crosstown in 2021 and Noventis,and Amaranth credit unions last year — is the largest in Manitoba and sixth largest in the country with assets of about $11.2 billion.

The merger of ACU, Westoba and Caisse would create a merged organization with nearly $10 billion in assets.

That’s about the same size as Steinbach Credit Union which ranks as the eighth largest in the country.

— with files from The Canadian Press

martin.cash@freepress.mb.ca