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Connexus : Issue 38
about how the brand will operate in the marketplace and staff expectation about bringing it to life,” s ays Evers, who notes that the name received 80 per cent support in a vote of members. alliances take time and hard work, says Evers, adding that the merger’s two-year integration program is on track. “Of course, we still have cultural aspects to bring together with people, and we know that’s going to take longer. But we’re focused on bringing that together and people are committed to supporting it.” Ultimately, a merger must benefit members, he says. Since March, People’s Choice has been offering members the expanded branch distribution network and product range after a technology platform conversion. “Members are getting the benefit of a better fee structure, better pricing on deposits and loans, and a broader product range. Plus each membership is getting an additional 30 branches from each other’s network and we know members are really taking advantage of that.” Global trends Canada and australia are among the strongest credit union sectors in the world. With their economies weathering the financial crisis better than most, most mutual mergers occur for positive reasons such as the pursuit of scale and an ability to better compete with banks. In the debt-troubled United States market, however, forced mergers have been the norm. “The GFC has really shaken them over there,” says Eggert. Credit Union National association chief economist Bill Hampel told The Washington Post recently that regulatory burdens in the form of higher compliance costs could lead to even more credit union mergers in the US. He said that, as a result of factors such as mortgage defaults, 37 US credit unions merged or liquidated in 2010 compared with 13 in 2007. The smaller asian mutual market is also seeing a rise in mergers. The merger of different types of mutual institutions is an interesting international phenomenon. a prime example is the signing of a heads of agreement by friendly society australian Unity and credit union Big Sky to explore and evaluate a potential merger with a view to better serving their combined membership groups. Schesser says the proposal represents a positive direction for the mutual sector because it enriches diversity. “I believe that would potentially open up people’s thinking to opportunities that are broader than like-for-like mergers or transfers of engagement.” If the alliance proceeds, it would give australian Unity’s 280,000 members access to a retail financial distribution network, while Big Sky’s 30,000 members would be able to take advantage of a new suite of options such as wellbeing products. “So it’s a nice win-win, with fundamentals of mutuality underpinning it all but with different businesses,” says Schesser. “I’d like to think that would inspire credit unions and building societies to look at those sorts of opportunities.” Evading pitfalls Mergers have myriad potential pitfalls. For starters, choosing the wrong partner institution can doom an alliance to failure. as a CEO who has led successful mergers, Evers is well aware of the importance of pursuing a change for the right reasons and with the right partner. “We don’t just merge for the sake of it,” he says. “We want to make sure it’s a value add to the existing membership and to the partners’ membership.” That translates to things such as better distribution networks and branches, superior products and pricing, and enhanced access to online and mobile services. There must also be cultural and strategic alignment between merger entities, he says. “Make sure you do strong due diligence as well, so there’s not a hidden compliance breach that’s going to blow up in your face afterwards and destroy your value. you need to take a very strong due diligence approach to legal, accounting, tax, credit assessments and all those sorts of things. Make sure there are no surprises – that they are all known MERGERS FEATURE “Members are getting the benefit of a better fee structure, better pricing on deposits and loans, and a broader product range. Plus each membership is getting an additional 30 branches from each other’s network and we know members are really taking advantage of that.” People’s Choice Credit Union managing director Peter Evers Connexus www.abacus.org.au 41 41 www.abacus.org.au