Credit unions strong in tough times
Between them the 21 credit unions in the association have 80 ATMS throughout New Zealand, the largest ATM network outside the banks. In combined financial volume, credit unions are about the sixth largest financial transactor in New Zealand. Credit unions come under the regulations governing non-bank deposit takers, and most issue prospectuses. They’re naturally stable - during the global financial crisis no credit union went under anywhere in the world. They can only lend to a natural person, so while they can issue mortgages of up to about $300,000, they don’t do the sort of property development loans that dragged down so many finance companies. There is also a deposit limit, set in 1982, so the largest deposit a credit union can accept is $250,000, but there is a proposed change sitting on parliament’s order paper. “Under the credit union model, the depositors own the union,” Lynch says. There are 175,000 members of New Zealand’s credit unions. John Walters, who chairs the South Auckland-based Aotearoa Credit Union, says the first credit unions were formed by poor immigrants, in particular Irish in the United States and Australia, who were locked out of mainstream banks so formed their own cooperatives to provide banking services. “That’s the model adopted all over the world. It’s usually poor people. In our case, our clients are 99 per cent Maori, Pacific Island or migrants from places like Africa and India,” Walters says. “Aotearoa is the fastest-growing credit union in the world. We’re proud of that, but it is also a reflection of the economy and society.” Henry Lynch, the chief executive of the New Zealand Association of Credit Unions, says International Credit Union Day on October 20 was a chance for credit unions to celebrate their work.