A recent report published by the World Council of Credit Unions indicates that Canada is home to 17.3% of global credit union assets and that credit unions in Canada have a relationship to approximately 45% of the economically active segment of the population (defined as those between 15 and 64 years of age). This penetration rate is about the same as it is in the United States but ahead of other countries with comparable financial systems such as Australia (31%), New Zealand (7%) and the United Kingdom (2%).
Given the importance of credit unions to Canadians, the recent announcement by the Ministry of Finance of new regulations that would allow Canadian credit unions to cross provincial boundaries and, through mergers, create more national financial institutions should not be overlooked.
Given the financial pressures being felt by deposit-takers, the Canadian credit union system is ripe for further consolidation. In 2011, for the second year in a row, the number of credit unions in Canada declined by approximately 5%, a faster rate than the global decline of 3.5%. These reductions have been through the merger of relatively small institutions rather than through mega-mergers which might take place once the new regulations are in place.
Just imagine if the largest credit unions (in terms of client numbers) in British Columbia, Alberta and Ontario merged. The new credit union would have well over 1 million members and 230 locations. Not only that, with $31 billion in assets it would be bigger than Laurentian Bank and the same size (but with more customers) than ATB Financial.
Despite the obvious opportunity, it will likely be a gradual dawning rather than a sudden realization. Issues, such as the need to integrate operating platforms, the location of the head office, the requirement to develop a national rather than a regional board and management structure, and the necessity to become supervised by OSFI, will likely act as a brake.