SCU would keep name, board of directors as part of Vancity
Tim Shoults
[email protected]
Squamish's locally-owned credit union may become part of Canada's largest credit union while still keeping its name and local decision-making powers in a unique merger proposal.
Squamish Credit Union (SCU) announced Wednesday (March 30) it has entered into formal merger talks with Vancity Credit Union.
Unlike most credit union mergers, where the smaller credit union would be assimilated into the larger one, SCU would operate as an independent business unit of Vancity under the merger proposal, keeping its brand name and a locally-elected board of directors.
SCU members would have partner share memberships in the local credit union while being full members of Vancity, allowing them to vote for both boards of directors, according to SCU general manager Bill Brumpton.
"We're really breaking new ground with this," he said Wednesday. "Vancity changed their rules at their AGM to allow for these partner shareholders and obviously they're interested in seeing these arrangements."
"We think this approach combines the best of both worlds - the resources of a large institution delivered within the neighbourliness of a local credit union," said Vancity CEO Dave Mowat.
Merger discussions started in December 2004 and were initiated by Vancity, Brumpton said.
"We have in the past mentioned we are capable of remaining independent and that is the case, but there are so many advantages to this proposal that we have to take a look at it," he said.
"The big advantage for us is the opportunity to expand our business. Currently we're restricted by regulation as to the size of loans we make and the people we lend to.
"House prices have gone so much in Squamish there are people who are unable to borrow from us."
SCU has two branches, more than 7,000 members and $62 million in assets, compared to Vancity's 300,000-plus members, $10.5 billion in assets and 42 branches in Greater Vancouver, the Fraser Valley and Victoria, making it the largest credit union in Canada.
Brumpton said the decision to enter into merger discussions with Vancity was not related to the decision by North Shore Credit Union to expand into Squamish. NSCU opens its first branch in Garibaldi Village later this month.
"We feel again that survival would not be an issue," he said. "It's more an issue of doing well. We could certainly survive, but thriving would be a different story."
The merger has to be approved by both boards before going to a vote of SCU members, which is expected in September 2005. A two-thirds majority is required to accept the merger.
SCU has guaranteed none of its current 40 employees would lose their jobs as a result of the merger.
"If anything, it will grow as we grow the business," Brumpton said.
Brumpton confirmed that SCU had discussed mergers with three other credit unions in the past two years.
Three years ago, at SCU's annual general meeting, credit union president Mike Suter addressed the topic of credit union mergers, saying a merger with SCU and a larger credit union would be "detrimental to our community values and to our memberships.
"We do not expect to be entertaining any kind of merger in the near future."
Suter said at the time financial observers are noting trends towards large urban credit unions, small closed-bond credit unions and "fiercely independent" community credit unions.
"Squamish Credit Union would be classified as a 'fiercely independent' community credit union."
SCU celebrated its 60th anniversary last year.
