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The Columbia Journal
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  • Volume Eight, Number Seven: October 2003

    Latest Credit Union Merger

    CPP News

    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, pending membership votes of the two organizations, and the transition will conclude by 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 beneficial for everyone.”

    He says the main reason for the merger proposal is the rising cost of new technology involved in member servicing. Reed says new systems, such as Internet banking and faster check processing, are essential in maintaining prosperous credit union, but the costs are often prohibitive for smaller organizations.

    “Traditionally, many credit unions have remained small in size in order to ensure democracy and personal contact and member accountability,” he said. “For the most part, credit unions keep their fees at about 75 per cent of bank fees or less. But rising costs of new technology means you either have to raise your fees or look for better ways of keeping your rates lower through economies of scale.”

    Reed says rising operating costs are among the main factors for the recent growing trend in credit union mergers in BC. The banks, because of their huge size, enjoy the huge profits that come with the volume of business. Credit 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 structures and jeopardize their more socialistic community service goals in favour of 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 integrity of 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 important. Credit unions are motivated by making money to provide services for their 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 enjoy locally placed branches from Vancouver to Surrey, giving it access to more communities and potential members. “United has a strong focus on consumer serving, while (Gulf and Fraser) has a strong commercial aspect, and both have 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.

     





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