Cost sharing is the main
motivator behind a finalized merger plan
between two well-established lower mainland credit unions, say reps.
The boards of the United
Civic Savings and the Gulf and Fraser
Fishermen’s Credit Union have concluded a tentative merger agreement,
membership votes of the two organizations, and the transition will
the spring of 2004.
“We expect our respective
members to vote to approve it,” says Martin
Reed, marketing director for Gulf and Fraser. “It will definitely be
He says the main reason for
the merger proposal is the rising cost of
new technology involved in member servicing. Reed says new systems,
Internet banking and faster check processing, are essential in
prosperous credit union, but the costs are often prohibitive for
“Traditionally, many credit
unions have remained small in size in order
to ensure democracy and personal contact and member accountability,” he
“For the most part, credit unions keep their fees at about 75 per cent
fees or less. But rising costs of new technology means you either have
your fees or look for better ways of keeping your rates lower through
Reed says rising operating
costs are among the main factors for the
recent growing trend in credit union mergers in BC. The banks, because
huge size, enjoy the huge profits that come with the volume of
unions, which are community-based enterprises, don’t have that luxury.
Many credit union members and
cooperative and labour activists worry
that creating larger credit unions will compromise their democratic
and jeopardize their more socialistic community service goals in favour
profiteering goals of unaccountable senior managers.
Reed agrees this is something
to avoid. But he insists that as long as
the democratic structures are maintained, and membership involvement is
encouraged, the size of the organization does not matter, and the
the credit union can be maintained.
“Banks are motivated by
making as much profit as possible as quickly as
possible for the people on top,” he said. “ The community aspect is
Credit unions are motivated by making money to provide services for
members. That’s a fundamental difference. That’s our main goal.”
The decision by the two
organizations to merge, Reed says, was based on
strategy, since while both groups are similar in size; each has its own
expertise in different areas.
“It’s the competing strengths
of the two credit unions,” he said, adding
that the new organization, which still has to be given a name, will
locally placed branches from Vancouver to Surrey, giving it access to
communities and potential members. “United has a strong focus on
serving, while (Gulf and Fraser) has a strong commercial aspect, and
expertise in wealth management.”
No branches will be closed as
a result of the merger and there will be
no layoffs of staff, Reed said.