Final green light for C&WJ-SECCU merger, after narrow miss
The latest merger of credit union businesses passed its last major hurdle this month.
But it has now emerged that the tie-up of the St Elizabeth Cooperative Credit Union, (SECCU), with Community & Workers of Jamaica Co-operative Credit Union, (C&WJCCU), was almost derailed several months ago when farmers revolted.
It took sustained backroom discussions and a sales campaign on the benefits of the deal for members of SECCU to vote yes during a second try at gaining their approval.
The initial 'no' vote by SECCU occurred on April 28 when members rejected the resolution to merge with C&WJCCU, and urged the board instead to seek a merger with the Manchester Credit Union, saying the latter would be a deal between equals. Manchester is a neighbouring parish to St Elizabeth, while C&WJCCU is headquartered in Kingston.
It took outreach by a number of officials to convince SECCU members that a deal with the larger C&WJCCU outfit would be beneficial to them. It involved sector heads such as former general manager of the Jamaica Cooperative Credit Union League, Glen Francis, and personnel from the Department of Cooperatives headed by Registrar Errol Gallimore himself.
A second vote by SECCU on July 26, this time approving the merger, cleared the path for C&WJCCU members to vote their approval later on August 18.
This is C&WJCCU's eighth merger acquisition in recent years. But SECCU is the only one known to have taken an uncertain path.
Asked what went wrong in this instance, C&WJCCU Chief Executive Officer Carlton Barclay said Tuesday that the "inevitability" of credit union mergers has resulted in intense rivalry as operators seek to woo willing partners.
BOJ TO REGULATE
The era of mergers among the community banks began as talks progressed between the credit union movement and the Bank of Jamaica, (BOJ). It became clear as the discussions advanced for BOJ to eventually take over the regulation of the sector that various entities would need to shore up their capital structures to meet the regulatory requirements of the central bank.
The stronger outfits began to consume smaller players, and in that time the number of credit unions fell by nearly a half, from 43 to 29.
"It's a competitive landscape and you have different credit unions trying to woo other credit unions. I am advised that members of Manchester went to the SECCU meeting and convinced some members, so that the vote was split and our proposal didn't get the majority," Barclay said.
SECCU was established in early 1970 by businessmen Stanford Birthwright and Trevor Myers, according to information from its website. Around 1986, SECCU merged with Alpart Credit Union; it grew again December 1995 when there was a transfer of engagement from Appleton Employees Credit Union.
The tie-up with C&WJCCU is scheduled for September 1, when SECCU's $2.5 billion of assets will be combined with C&WJCCU's $13.13 billion. The merged outfit will have a membership base of 122,000, served by a network of 22 branches.
The combined assets of $15.6 billion, according to Barclay, will make C&WJCCU the largest credit union in Jamaica. He also argues that scale is increasingly important within a competitive banking environment.
"We're competing against large banks and that makes us a dot on the financial landscape compared with any of the [commercial] banks. We are in a position where we are offering the same services, and in order to do that well we must have sufficient size and efficiency to do it," he said.
As such, the SECCU deal will not be the last, he added.
All four branches of SECCU will be rebranded as C&WJCCU and will remain open, Barclay said. Additionally, all staff will be retained and, if necessary, redeployed to other areas of the merged operation.
Two members of the former SECCU board will join the 11-member board at C&WJCCU, Barclay said.