Co-operate or Merge – Mountain Style

Today’s announcement from seven credit unions in the BC interior is a shocker and clear evidence that smaller, up country credit unions are in a strategic bind.  The announcement says that formal talks are underway to explore the potential for a merger of the seven credit unions; Columbia Valley, Creston, East Kootenay, Grand Forks, Heritage, Kootenay and Nelson.  Seven of BC’s 42 credit unions.

The release paints the initiative as ‘co-operation among co-operatives’, but that is not really the case unless the individual units retain substantial autonomy.  While the release references co-operative principle #6 – ‘Co-operation among Co-operatives’, it ignores principle #1 – ‘Voluntary and Open Membership’.  Independent consumer co-operatives may choose to federate in second tier co-ops.  That is the co-operative model for business.  Local ownership is retained and so is the ability to refine services to suit local demand.  Members with similar interests retain democratic control.

Mergers is more the conventional model for business.  Community ownership is lost, diluted within the larger entity.  The shared or common interests of the membership grow thin, become generic.  The level of consumer participation in governance is reduced, often dramatically.  Services, pricing, and delivery channels are inevitably harmonized across the merged business.

The public statement allows that much still has to be researched and negotiated.  The text speaks of a business case.  What is also needed is a ‘political case’.  A business case will look mostly at operational efficiencies.  That kind of approach will often lead one to choose a dictatorship over a democracy.  The political question is real, we should realize that credit unions are political constructs built by their communities.  That question is,  “What organizational form will best serve the long-term interests of the community?”  Accountability is key.

The published statement is a fairly direct comment on the failures of Central 1 Credit Union, the second tier level co-op that ties together all BC credit unions.  Central 1 has been retreating from providing supports and secondary services to small credit unions over the past two decades.  These are services not needed by large credit unions, who have increasingly had influence.  Central 1 no longer effectively brokers the interests of the 30 or so small credit unions the way it once did.  In the absence of a fully functional ‘co-op for credit unions’ these seven credit unions are left with a tough choice.

That choice is to co-operate or to consolidate.  The latter has become the dominant model since the 1980’s; with examples such as Coast Capital, First West, and Coastal Community.  The truly co-operative model is less clearly defined and more difficult to pursue.  It would take political resolve and a vision that is broader than the commercial perspective that dominates our popular culture.

These credit unions have proud and noteworthy histories.  For example, a few decades ago, Grand Forks and District Credit Union played a key role in retaining a sawmill locally by converting it to a co-op, retaining important jobs until the recession was over.  That was just one example of how local credit unions can play important, responsive roles.  I am curious to see how these seven credit unions, and their memberships deal with the issues before them.

One thought on “Co-operate or Merge – Mountain Style

  1. Hi Ross,

    Enjoyed reading your column on the Opinion page of the Oct. 19th Vancouver Sun. I agree with your comments on the direction some larger credit unions are taking.

    Back in the days when I was consulting to credit unions, I worked with many credit unions in the Kootenays so I was interested (and quite surprised) to learn about the proposed “grand merger”. While there may be reasons for individual credit unions to consider merging, I think trying to merge 7 credit unions more or less simultaneously would be a very challenging endeavour.

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