CFCFE conference showcases successful Irish credit union mergers

Mergers can bring benefits of scale and an increased talent pool – but need to be done in the right way and at the right time

How to conduct successful mergers was a key issue at the Centre for Community Finance Europe’s (CFCFE) conference on Monday (29 March).

The online event explored how mergers are a useful strategy to strengthen credit unions, with inputs from Michael Byrne, a director of Core Credit Union in Dublin; Michael O’Reilly, secretary of St Canices Credit Union in Kilkenny; Caroline Long, CEO of Limerick & District Credit Union; and Robert Kelly, CEO of the Association of British Credit Unions (Abcul).

Mr Byrne stressed the importance of viewing credit unions as equals, even when those merging have different sizes. Core Credit Union was formed after the amalgamation in 2014 of Dalkey Credit Union, Sallynoggin / Glenageary Credit Union and Shankill, Ballybrack & District Credit Union Ltd.

The mergers helped the newly formed credit union attract new members and increase its loan book. Core Credit Union has 35,000 members, €140m in assets, €45m in loans, €75m available to lend and 45 local employees.

As part of the merger, the three credit unions created a new nine-member board, three from each credit union. They also worked on building trust across the three organisations, with staff from different credit unions visiting each other’s offices and understanding processes.

“Culture is what makes or breaks a merger,” he said. Advantages of the merger include scale, drawing together greater expertise and different skills, making the segregation of duties easier to implement, avoiding over reliance on any one person, and better succession planning. In addition, Core Credit Union can invest in new products, improve efficiencies and marketing and cover a wider area, added Mr Byrne. He said that it was also important to allocate the right level of resources to a merger, to avoid some staff working two jobs at once.

Caroline Long talked about Limerick & District Credit Union’s experience, which was formed in 2012/2013 through the merger of several local credit unions who wanted to offer members a bigger range of services. In the initial stages of the merger, the credit unions focused on building a common culture and aligning their policies. As part of this, staff from each credit union visited each other’s offices and highlighted red-line issues. Members were also consulted about their emotional attachment to local branches.

Collaboration is another alternative and it can also help smaller credit unions access share costs and purchase services together, added Ms Long.

Michael O’Reilly shared St Canices Credit Union’s experience, which underwent a series of member-driven mergers, and now serves all the people who live or work within the wider geographic common bond areas of Kilkenny, Carlow, Laois and Tipperary.  It is the largest community-based credit union in Ireland with more than 65,000 member-owners. Mr O’Reilly tips for a successful merger include appointing a project manager to deal with the merger and seeing the credit unions involved as equal partners.

“An important part of every merger is to listen carefully,” he said, adding that staff concerns about potential job loses or those of members around the loss of identity should also be addressed early on before progressing any further with a merger.

Robert Kelly provided an overview of the credit union sector in Britain, where mergers have reduced the number of credit unions over the past 20 years. In 2020, Abcul launched Vision 2025, which sets out its role in driving the movement forward. Abcul developed the strategy from a member consultation, where responses saw a role for the apex in coordinating and supporting strategic mergers.

Abcul is currently developing a white paper, which will look at various aspects of strategic mergers.

“For too long mergers have been a taboo,” said Mr Kelly, warning that mergers often come too late, as takeovers in times of distress, rather than strategic decisions.

Dr Paul Anthony Jones, director of research at CFCFE, said: “One of the things we know about change is that it’s not easy, it’s disturbing, often resisted but if done well, managed well, implemented well, as the panel demonstrated, it brings about tangible benefits for our members.”

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