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MANCHESTER and LONDON, UK – Banks and credit unions do not have to be adversaries. Barclay’s Bank, a 300-year old international bank, has proven the two types of financial institutions can forge useful partnerships to work on social goals. Barclay recently gave nine credit unions over 500,000 (US$889,000) to help tackle the problem of the unbanked in the United Kingdom. They have also announced a second program that will make funds available to credit unions and other community organizations with innovative ideas on how to help those that have no access to financial services.The Association of British Credit Unions, Ltd. (ABCUL) released the results of the Barclay-Credit Union pilot program that began in 2002. Barclays worked with the nine credit unions to introduce the World Council of Credit Union’s PEARLS monitoring system. Among the results were a drop in loan delinquencies by an average of 2.7%; assets increased by 25%; and operating expenses dropped from and average to 12.3% to 8.7%. Several of the credit unions that changed their lending policies found they could make loans more available to those that needed it, without giving credit to those unable to repay and further compounding their negative financial position. The program won kudos from Ministers of Parliament (MP). Jim Dobbin, the MP for Heywood & Middleton spoke for several MPs when he cited one three-year old credit union’s contributions. “StreetCred is a very credible alternative to banks for local people. A lot of our residents are paying an average APR of 177% compared to the 12.68% charged by StreetCred.” Barclays was equally pleased with the results. Christine Martindale, regional manager for Barclays in the North West said, “Credit unions provide a fair and affordable alternative to loan sharks as well as an opportunity for people to save – so it’s great to see so many people in the area now enjoying the benefits.” Barclays, as part of their social responsibility program, has been and continues to be committed to helping eliminate financial exclusion by improving “access to financial services for individuals, businesses and social enterprises, particularly those in deprived areas. Barclays cannot tackle the issues alone and an important part of the work is to support organizations like credit unions that provide alternatives for those who are unable to access mainstream financial services,” Martindale said. In one of its latest moves, the bank’s Financial Inclusion Team launched a new program to fund groups that look for new solutions to predatory lending problems in England and Wales. Funds will be made available to all non-profit organizations, including credit unions that have been in operation for at least six months as of Sept. 30, 2004. The bank wants participating organizations to “share knowledge and expertise in the community finance sector. We will therefore seek to work with the organisations that receive awards to share best practice with others.” The new ABCUL Chief Executive, Mark Lyonette has stated repeatedly that he believes that credit unions can substantially reduce the number of the unbanked. Credit unions have only recently been given the legislative backing to develop beyond a very limited membership and services. The new legislation has allowed credit union mergers. One such merger occurred this summer when the two largest credit unions in England No 1 Police and Copperpot completed a merger to form No 1 Copperpot. The new credit union will serve over 16,000 police in England and Wales. They have 34 million (US$61 million) in assets. Although small by US standards, the size represents significant size for the fledgling UK movement. Lyonette is quick to credit the help of banks. `We are working, in partnership with banks, to set up the systems which will make it possible for credit unions to offer service accounts to their members. This will enable credit union members to access their money through ATM machines, and use other electronic banking facilities. With the ability to offer these services, credit unions will be able to meet the needs and expectations of their members and reach out into their communities. They will make a solid impact on the 1.5 million families who are still without an account of any kind.” -

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