Members of three Manitoba credit unions approve merger

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This article was published 20/06/2024 (530 days ago), so information in it may no longer be current.

Assiniboine Credit Union, Caisse Financial Group and Westoba Credit Union members have voted overwhelmingly in favour of a merger.

The new entity, to be called Assiniboine Credit Union (or Caisse Assiniboine), is expected to become official Jan. 1. The merger resolution was approved by 89 per cent of Assiniboine members, 88 per cent of Westoba members and 84 per cent of Caisse members.

With about $9.6 billion in assets, upon formation the new Assiniboine will become the second-largest credit union in Manitoba. It will trail only Access Credit Union, which holds some $12.4 billion in assets after a number of mergers over the years with Crosstown, Noventis, Sunova, Amaranth, Carpathia and Casera.

The credit union consolidation trend is mostly about dealing with increasing operating costs, including technology investments related to online and digital banking, observers say.

Kevin Sitka, CEO of Assiniboine Credit Union — the largest, by far, of the three involved in the recent move — has been unanimously recommended by the respective boards to become CEO of the merged entity.

“We are very excited about not having to pay for digital investments three times, not having to pay for increasing compliance and regulatory costs three times,” he said.

Jim Rediger, CEO of Brandon-based Westoba (which is about one-sixth the size of ACU), said there will be some new service offerings members should be able to access soon after the deal comes into effect, including Apple Pay and Google Pay.

“Our members have asked for those services, but they are extremely expensive,” he said. “You need scale to be able to offer services like that.”

Going from $1.5 billion to close to $10 billion in assets will give Westoba the ability to manage and service larger commercial agricultural opportunities, Rediger added.

When the three merged entities begin operating as one organization, it will reduce the number of credit unions in Manitoba to 15 — a long drop from the 60 in business 20 years ago.

Curtis Wennberg, CEO of Credit Union Central Manitoba, said despite the reduced number of independent operations, the mergers have served the more than 700,000 Manitoba members well.

“We still track well when it comes to customer satisfaction … The total number of employees is still very high at about 3,400 and increasing and the total number of members keeps going up year over year,” he said.

Credit unions also capture a strong 40 per cent of the financial services market in Manitoba, one of the highest rates in the country.

Despite consolidation, the three credit unions have said every current employee will be offered a position and none of the 50 total branches will close.

However, Sitka said, “We continually assess how people bank and how they use our branches. That has been ongoing for some time now and it will continue.”

Simon Berge, chairman of the department of leadership and organizations at Dalhousie University in Halifax and a former University of Winnipeg academic, has researched co-operatives and social enterprises.

He said mergers in credit unions have been happening across the country “because there is more demand for complex banking services, like mobile, phone and online banking, that smaller credit unions just can’t offer on their own. These mergers allow them to combine their resources.”

However, there could be the danger of losing touch with members who appreciate the co-op structure and community connection of their local credit union, Berge said Thursday.

“Not everyone wants to do their banking on the phone,” he said. “The universal approach to providing service may be helpful to the majority, but the connection to those most in need in the community is the biggest concern — like the single mother with three children who has to run to the bank but can’t because it is too far away or it’s now closed.”

Berge said the fact ACU is a certified B Corp — which requires an audited assessment of an organization’s social and environmental relationship with its community — bodes especially well for the new credit union to be able to maintain connections to members and community.

“We are very much looking to maintain the co-op spirit,” Sitka said. “That relationship and the local feel is a very important part of our value proposition going forward.”

Kiran Pedada, an assistant professor of marketing at the Asper School of Business at the University of Manitoba, said he does not believe sector mergers will have negative consequences on the kind of service credit unions have been providing.

“It will be interesting to see what kind of synergies that can be leveraged,” he said. “Each of the credit unions has its own competitive advantage. Now they should be able to offer better value to their communities.”

With branches in 120 communities in Manitoba — and being the only financial institution in 70 of them — “Credit Unions are not abandoning the small towns,” Wennberg said.

“In fact, we give back to the communities, because, remember, all profits go back to members or the community in some way. We are owned by our members. It is a very different structure.”

martin.cash@freepress.mb.ca