WesCorp's broker/dealer up and running

SAN DIMAS, Calif. - WesCorp's broker/dealer, WesCorp Investment Services, is now open for business. The $12 billion corporate credit union received approval from its board of directors last June to proceed with plans to develop its own broker/dealer. WesCorp recently received membership into the National Association of Securities Dealers and is now ready to begin selling securities to credit unions. "This was driven by our members' requests. From the information we had from prior surveys, we knew the demand was there. They (WesCorp members) emphasized that they'd love to see WesCorp have a broker/dealer," said Dwight Johnston, who will serve as managing principal for WesCorp Investment Services. Johnston was speaking from San Francisco, the site of WesCorp's economic forum. He said member response has been great so far, but he has no idea how many WesCorp members will utilize the broker/dealer. Through the new broker/dealer credit unions will have access to agency, mortgage-backed and money-market securities; U.S. Treasury bills; notes and bonds; and other fixed-income products. Credit unions can also get investment advisory services. As a member of the NASD WesCorp can market to anyone in the country. Earlier this year WesCorp received permission for a national field-of-membership from NCUA, but did not need that authority to market its broker/dealer nationally. Johnston, however, said for now WesCorp Investment Services will focus on serving WesCorp member credit unions, but in the future will expand nationally. Johnston said WesCorp plans to utilize the talent it has in place to staff WesCorp Investment Services. "The same people here credit unions have been dealing with for certificates, they will now be dealing with for securities. We're keeping the same group of people together," said Johnston. He did say WesCorp Investment Services will hire three new people to help run the broker/dealer which will be housed at WesCorp's headquarters. WesCorp isn't the only corporate credit union getting into the broker/dealer space. Southwest Corporate, Dallas, unveiled an investment advisory service in the late `80s and launched a broker/dealer service, known as CUSOURCE Capital Markets, about two years ago. U.S. Central also has broker/dealer services through its Capital Markets, Inc. Johnston said WesCorp Investment Services will only market to credit unions. WesCorp is entering a competitive market. While some credit unions do use Street brokerage firms, many are dealing with regional broker/dealers. The credit union industry also has a corporate credit union-owned broker/dealer in Corporate Network Brokerage Services, Overland Park, Kansas. It is owned by 21 corporate CUs. WesCorp and Southwest Corporate are not owners in CNBS. There is also talk from MEMBERS Development Company, LLC, a company formed by 31 credit unions, six CUSOs and CUNA Mutual, to form a national broker/dealer, but it's unclear whether that will be geared for CU member investments or credit union investments. -pgentile@cutimes.com