GSB and Churches credit unions to merge
Avia Collinder, Business Writer
GSB Co-operative and Churches Co-operative have agreed to combined operations to form the second-largest credit union in Jamaica with assets of J$6.8 billion and a membership base of 143,000.
The deal puts the new entity in striking distance of dominant player COK Sodality, whose own acquisition of a smaller credit union two years ago, has helped to pump up COK's assets to J$6.89 billion as at February 2011.
GSB and Churches formalised their plan to merge with the signing of a memorandum of understanding at the law offices of Samuda & Johnson in Kingston on Wednesday.
The credit unions outlined the terms under which negotiation for the amalgamation would take place, and say they will solicit permission from members to merge the operations when a deal emerges.
There are as yet no details on what the new entity will be called, nor the staff and management changes that will result.
Churches president Orville Hill said the board of both companies had already agreed to the merger in principle, while GSB president Michael Roofe said the planned union "will help both operations to weather challenging times".
GSB, the smaller of the two entities, has a loan portfolio of J$1.7 billion, and total assets of J$2.5 billion.
The loan portfolio grew 8.2 per cent increase in 2010.
"As separate entities, the GSB and the CCCU have achieved substantial growth and expansion and, as a single unit, we will be able to build on that solid platform to take our business to the next level and become one of the leading financial institutions in the country," said Hill, at the signing of the agreement.
"This merger can only redound to the benefit of all of our customers, who will now have a more extensive slate of products and services to choose from, a higher level of customer service, more locations from which to do business, and numerous other benefits."
Churches Co-operative last year grew its assets by 11 per cent, from J$3.9 billion dollars to J$4.3 billion. Its loans grew by 9.5 per cent from J$2.7 billion to J$3 billion.
Roofe stressed that the arrangement was primarily about achieving economies of scale in the operations, and ultimate build shareholder value.
"It is our fervent hope that the meeting of our minds will bring forth superlative ideas which will ultimately lead to a stronger institution capable of withstanding the vicissitudes of this challenging period," Roofe said.
The proposed merger is the latest in a series of deals to strengthen asset and capital base among players, ahead of a new regulatory regime soon to be legislated.
In March, the former telecoms, based Communications and other Workers of Jamaica Co-operative Credit Union Limited (C&WJCCU) acquired Clarendon Co-operative Credit union, adding a near J$1 billion in assets and just under 40,000 members to its operation. Four months earlier, in November 2010, C&WJCCU also absorbed Marine and Allied Co-operative Credit Union.
A year earlier, COK and Sodality merged in November 2009 - a deal that qualified COK, through Sodality's membership bond, to solicit membership nationwide.
Churches has been a member of the Jamaica Co-operative Credit Union League since 1977. GSB was registered on July 2, 1946, decades later acquiring the portfolio of Metropolis Co-operative Credit Union - formerly Lands Clerks Co-operative Credit Union Society - in December 1999 and the Kingston and St Andrew Credit Union in June 2003.
Until 2010, GSB served public-sector employees and their families only, before opening its bond to include all professional groups.