Canadian credit unions plan to create national bank
TORONTO - There are certainly larger banks in Canada - Canadian Imperial Bank of Commerce, with $268 billion in assets is the largest of the big six. National Bank, with $67 billion in assets, is the smallest. But what will make a new national bank in Canada outstanding is not its size - an initial $11 billion in assets - but that it will be created by a group of nine credit unions from four provinces.
Of the nine partners who filed the plan with the federal government, five are from British Columbia - Grand Forks Credit Union; Gulf and Fraser Credit Union; Northern Savings Credit Union; Delta Credit Union; and Richmond Savings.
Also among the group of nine are Metro Credit Union of Toronto; Credit Union Atlantic of Halifax; Astra Credit Union of Winnipeg; and the Civil Service Cooperative Credit Society Ltd. in Ottawa.
Civil Service Cooperative Credit Society, Ontario, one of Canada's largest credit unions, is also spearheading the initiative.
Gary Seveny, chief executive for CS Co-Op explained that the new bank's scope is intended to be national. Although the charter group includes nine credit unions, Seveny said they plan to bring in other credit unions that meet the requirements and expand it across Canada.
The name for the new bank has not been decided yet. What is known is that it will be a full-service financial. According to the National Post, Canadians will be invited to become owners of the bank by buying a membership. However, that's where the similarity to credit unions will end. Unlike credit unions in Canada which operate within their own provincial borders, the new bank formed by the nine credit unions will operate nationally and have more extensive business powers. The bank plans to focus on small and medium-size businesses for its commercial lending activities.
Last year, Vancouver City Savings Credit Union of British Columbia, together with 11 other credit unions, tried unsuccessfully to launch a national bank under a similar plan with $10 billion in assets and 100 branches throughout Canada. The plan ended when VanCity-the largest credit union in Canada with $6 billion in assets-pulled out in July. According to the National Post, the credit union's board of directors said the plan was too risky. -