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Merger discussions are underway
September 16, 2021
6:49 am
pooreva
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Just got an email from Hubert:

We are excited to announce that Access Credit Union, Noventis Credit Union, and Sunova Credit Union are formally discussing a potential merger.

What will happen to Hubert Financial if the merger goes through?

The potential combined credit union will have a collection of subsidiary operations, such as AcceleRate Financial and Hubert Financial. For now, it will be business as usual for each division. In the event of a positive member vote in early 2022, we will evaluate the services currently offered through the virtual divisions to determine how to maintain a high quality of service for members.

SHOULD we (Hubert members) be concerned????

September 16, 2021
7:13 am
NorthernRaven
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Even if they decide to merge, the management group that winds up running the combination (they'll have to figure out what branding they are going to use for the combined entity) would have to sit down, analyze the duplicate operations (including branches and other stuff), and figure out the consolidated strategy. They'd have to prepare a single IT platform to handle accounts and all that sort of stuff.

Unless there's a lot of commonality under the hood with the three, I suspect they'll be running the individual online divisions (perhaps with some cosmetic unified rebranding to whatever name they go with) through 2022, anyway.

September 16, 2021
8:28 am
Norman1
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It is too early to start worrying.

The talks could lead nowhere. Afterwards, the members of one of credit unions could not like the agreement and vote it down.

September 16, 2021
8:33 am
Dean
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.
What NorthernRaven & Norman said

Some of us have seen these CU merger attempts before. Sometimes they're successful ... but oftentimes Not. And quite often, the cost of merging can be far too prohibitive. For the successful ones, the completion of the process can take 'Several Years'

For now, us Hubert members shouldn't lose any sleep over this.

    Dean

sf-cool " Live Long And Prosper " sf-cool

September 16, 2021
10:10 am
Loonie
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The unanswered question, for me, is Why?

September 16, 2021
11:03 am
Dean
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Loonie said

The unanswered question, for me, is Why?

.
In the financial world, in most cases . . .

    Dean

sf-cool " Live Long And Prosper " sf-cool

September 16, 2021
11:47 am
AltaRed
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Economies of scale to keep costs down per unit is no doubt the key motivator and perhaps to diversify its membership and lending market. Potentially also looming Open Banking that is coming some year (or decade) soon.

From the list of top 100, it seems like a CU will need to get to at least $5B in assets to be competitive longer term.

September 16, 2021
12:57 pm
Loonie
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What I meant was, I'd like to hear it from Hubert/Sunova as to "why?"
I think they owe members more of an explanation.

From my point of view as a member with deposits, there is no economy of scale with larger FIs. Quite the opposite. The bigger they get, the worse their rates are most of the time and the higher the salaries of their CEOs, CFOs, COOs etc. One need only take a glance at the largest FIs in the country to see this. RBC, the biggest, generally has the worst rates, along with the rest of the gang of five. And so on.

September 16, 2021
7:05 pm
Norman1
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Connecting Manitoba has the credit unions' explanation for the proposed merger.

Should it proceed, the merged credit union will adopt the Access name. Larry Davey, President & CEO of Access Credit Union, would become President & CEO of the new entity.

I am currently a member of AcceleRate Financial / Hubert Financial for virtual banking services. What will happen to these divisions?

The combined credit union will have a collection of subsidiary operations, such as AcceleRate Financial and Hubert Financial. For now, it will be business as usual for each division. In the event of a positive member vote, we will evaluate the services currently offered through the virtual divisions to determine how to maintain a high quality of service for members.

September 16, 2021
7:54 pm
AltaRed
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Loonie said
From my point of view as a member with deposits, there is no economy of scale with larger FIs. Quite the opposite. The bigger they get, the worse their rates are most of the time and the higher the salaries of their CEOs, CFOs, COOs etc. One need only take a glance at the largest FIs in the country to see this. RBC, the biggest, generally has the worst rates, along with the rest of the gang of five. And so on.  

There is a major difference between entities with $20+B in assets which are primarily retail and small business offerings (like Meridian, Equitable Group and Home Capital Group) and the big banks with wealth management, capital markets, insurance, etc. that are in different business lines. There is no need to bring the big banks into the discussion.

I have little doubt this proposed merger is designed to be able to compete with Alterna, Meridian, Coast Capital, Servus , Equitable, Home Capital, etc, etc.

Members can go to the individual CU websites to get the rationale for the merger. Example from Sunova's website https://www.sunovacu.ca/merger-discussions-are-underway/

September 16, 2021
8:46 pm
AltaRed
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I've written before that the consolidation in the CU business will most likely continue unabated for years to come. It has too for entities to remain competitive.

This 2006 article https://www.investmentexecutive.com/newspaper_/news-newspaper/news-34659/ addressed the subject 15 years ago and this 2017 article https://www.mondaq.com/canada/financial-services/625964/current-trends-in-the-credit-union-sector speaks to most of the same things.

As of April 2021, only 231 credit unions remain as members of the Canadian Credit Union Association.

September 16, 2021
9:14 pm
Loonie
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AltaRed said

There is a major difference between entities with $20+B in assets which are primarily retail and small business offerings (like Meridian, Equitable Group and Home Capital Group) and the big banks with wealth management, capital markets, insurance, etc. that are in different business lines. There is no need to bring the big banks into the discussion.

I have little doubt this proposed merger is designed to be able to compete with Alterna, Meridian, Coast Capital, Servus , Equitable, Home Capital, etc, etc.

Members can go to the individual CU websites to get the rationale for the merger. Example from Sunova's website https://www.sunovacu.ca/merger-discussions-are-underway/  

Yes, I think we are well aware of your opinion on this issue.

You may be right, but, personally, it makes no sense at all that they would do this in order to compete with Meridian, Alterna etc., whose rates are generally LOWER for depositors. It's a downward sort of competition if you want to call it that. In my view, it's more about eliminating competition.

I do realize the banks, especially the big ones, have many more enterprises. However, I am looking at this from my point of view as a depositor, not a stockholder, so the answer is that the big banks are not competitive with either the smaller banks or the CUs, generally. From where I sit, bigger is not better; it's worse. (FWIW, pretty well every CU offers some form of "wealth management" and is eager to promote it.)
I suspect that, in this case, the underlying MB economy may be a big piece of the puzzle, but I have not researched that in any depth except to say that agriculture is in trouble and I have been depositing less in MB than I did earlier because of this.

September 17, 2021
5:29 am
canadian.100
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Hubert dropped their HISA rate to 1.1 so obviously there are economic issues.

September 17, 2021
7:11 am
cgouimet
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I also got that 1.1% email this morning.

September 17, 2021
7:56 am
cgouimet
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Hubert was a good place to hold savings but have become less competitive and more volatile.

I just triggered transfers of 90% of our HISA's out of Hubert ...

September 17, 2021
8:01 am
AltaRed
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Loonie said
You may be right, but, personally, it makes no sense at all that they would do this in order to compete with Meridian, Alterna etc., whose rates are generally LOWER for depositors. It's a downward sort of competition if you want to call it that. In my view, it's more about eliminating competition.  

The Sunova link I provided pretty much lays it out what the strategy is. I think it is very clear that the merger is about economies of scale to cut costs per unit and to diversify their lending operations to more businesses. They have no real choice as discussed in the links I provided in post #11.

Fintechs at large (the competition) are squeezing (narrowing) the spread between deposit and lending rates leaving insufficient cash flow to cover costs. Every business must cover costs and that ultimately means they can either no longer lend at competitive rates, or pay depositors at competitive rates, to keep the lights on. That can and eventually will put the least efficient out of business.

The links in #11 are interesting with the 11 years of time between the articles albeit there appears to be some encouraging views that the very small CUs that are very local may well survive the hollowing out of the 'middle third' of the CUs. Very local CUs tend to serve isolated communities detached from the mainstream or certain unions or trade groups such as foresters or police or firefighters and they don't have to compete at the broader public level. That is obviously a good thing providing services no one else wants to give them anyway. That, may or may not, change with time with the expansion of online banking and eventually Open Banking in the next 5 years or so.

September 17, 2021
8:19 am
christinad
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Its too bad. I like hubert. I guess if this happens i’ll look at peoples trust again. Its good not to close accounts!

September 17, 2021
8:40 am
AltaRed
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The larger and middle group of CUs are looking for other ways to compete. Some of them as we know are branching outside their 'charter' by starting banks to reach a broader customer base. However, a CU needs to be of considerable size to employ the expertise and start up expenses to do so. The CU associations are also lobbying their regulators to allow them to see insurance as additions to their business lines.

I suspect we will continue to see the companies listed on the HISA chart here change every year (maybe the addition of more CU banks) and likely get smaller (due to CU consolidations).

September 17, 2021
9:46 am
pooreva
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christinad said
Its too bad. I like hubert. I guess if this happens i’ll look at peoples trust again. Its good not to close accounts!  

Peoples? Why? They both now have the same rate for HISA. The only difference is GIC where Peoples offers 1.45%/year vs 1.30%/year. Plus Peoples is under CDIC while Hubert is unlimited.
I would choose EQ over Peoples at any time. Better customer support, similar GIC rates.

September 17, 2021
1:39 pm
Dean
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sf-cool " Live Long And Prosper " sf-cool

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