Two more credit unions to merge
TWO OF Jamaica’s medium-sized credit unions are awaiting the green light from their membership i n the proposed merger of Gateway Co-operative Credit Union with EduCom Co-operative Credit Union.
The first of two special general meetings is scheduled for the Montego Bay Civic Centre on Thursday, April 18, when the membership of Gateway CCU will vote on the board-recommended amalgamation. The second meeting of EduCom’s membership is scheduled for the Jamaica Conference Centre on April 25.
Both memberships have to approve the merger. Assuming their votes are favourable, the Department of Co-operatives and Friendly Societies would next have to give its assent before the credit unions can combine.
Both EduCom and Gateway are themselves products of previous mergers effected during the wave of business combinations that have happened since 2008, a year that marked the early stages of discussions for the regulatory oversight of credit unions to be shifted to the central bank. For some, the transactions were meant to strengthen their capital base to meet what was expected to become more stringent capital requirements by a new regulator, the Bank of Jamaica; for others, the tie-ups were about growing their operations and building up market share.
Gateway is the product of the amalgamation of Montego Bay Co-operative Credit Union with the Hanover Credit Union in 2017. There are four branches in its network, one in Falmouth, Trelawny, two in Montego Bay, St James, and one in Lucea, Hanover. As at December 2023, Gateway had $13.16 billion in assets and a membership of over 72,000, according to CEO Ornell Bedasse. He feels that this is a merger of equals.
“We’re talking about economies of scale, increased distribution channels, and getting the best of all the products and services for the benefit of more members,” Bedasse said.
EduCom resulted from the
merger of AAMM Co-operative Credit Union and UWI Co-operative Credit Union in April 2015. EduCom now operates nine branches following a further merger with St Catherine Co-operative Credit Union in 2017. The latest available report on EduCom shows that it had assets of $13.89 billion and net savings of just over $11 billion, with a membership base of about 82,000.
Acting CEO of EduCom Camille Drummond declined to comment on the planned tie-up with Gateway, saying she would rather wait until after the EduCom membership voted their preference.
If the proposed merger gets the nod, the total number of credit unions in Jamaica will be reduced from 25 to 24. This is down from the mid-1970s peak number of 96.
Total savings at credit unions stood at just around $140 billion as of December 2023, up from $125.55 billion the previous year. Their combined assets amounted to nearly $177 billion.
Bedasse says that when Gateway’s membership meets on Thursday, he will be making a strong case for the merger.
“The truth is that you have to grow. Whatever doesn’t grow will die. Using five-year spans, you realise that you can’t wait until you need to; but rather, you have to do it while you’re strong. The time is right, and the time is ripe,” he told the Financial Gleaner.
The credit union movement serves a membership base of around one million.
The transition to central bank oversight is still to be finalised and is pending the passage of two pieces of legislation: the Co-operative Societies (Amendment) Bill, and the Credit Unions (Special Provisions) Bill.
The former will shift the oversight of credit unions from the Department of Co-operatives to the Bank of Jamaica and restrict the deposit-taking activities of those co-operatives classified as credit unions; while the latter piece of legislation deals with licensing and prudential supervision.