Alterna’s second merger with a Toronto area credit union in less than six months. | Alterna Bank | Discussion forum

Yeah, this merger was announced late last year and Alterna's CEO even mentioned it was due to close "shortly" at their AGM last month.

There's been a flurry of credit union merger activity in Ontario in the past few years, with more on the way. The DICO "list of members" website is out of date, too, in that they're still listing as "divisions" of the amalgamated credit union the names of the former credit unions even though those divisions are no longer operating separate websites and have been integrated from a banking system and merged membership perspective. So, it appears longer than it actually is. I'll have to revise my earlier estimate from last month and now predict within the next 2 years (call it April 2021), Ontario will have only one dozen independent credit unions left. The tiny closed bond credit unions just can't afford the compliance and technology upgrades that need to come, on generally declining memberships, so I think Alterna, Meridian, Libro, PACE, etc. will be the ones that assume them. They're nice tuck-in mergers, too, because often they're single branch credit unions in urban areas that can be easily closed because there's a nearby merged credit union branch.

Interesting it was done as an asset purchase agreement, instead of an amalgamation, though. I think you'll see further City Savings branch closures where they're located nearby to Alterna Savings branches.

Cheers,
Doug

Thanks for the useful update on the City Savings branches, one of which has now closed and one of which is being rebranded as an Alterna Savings branch. 🙂

As for a potential PACE merger, it's possible, to the extent that it's possible/probable PACE may merge with another Ontario credit union; however, I don't think this is the reason for the capital raise. Credit unions have to have, as a percentage of their total assets and their risk-weighted assets, what's called risk capital, which consists generally of retained earnings (i.e., profits not paid out as dividends and retained as investments on the credit union's balance sheet), common, and preferred shares. It's more likely that Alterna's past mergers and their organic growth in assets have necessitated the capital raise to bring their capital above or well above the required levels. As well, they may have used some of those retained earnings to finance some of their branch openings, new HQ office space, and other renovations, which would mean they'd needed to have raised capital.

Don't get me wrong, I don't think Alterna's done merging by any stretch and will continue to consolidate 1-2 credit unions per year whilst opening branches and growing organically. However, there's a fair bit of overlap with PACE Credit Union in terms of geographic footprint (the Competition Bureau may not like that) and DICO bringing in the former CEO of WealthOne Bank of Canada suggests to me DICO would like to see it remain a standalone credit union. Once their forensic audit is complete and they've implemented stronger risk controls, PACE is already a well-capitalized credit union...I could totally see them, along with Meridian, Alterna, Libro, and Tandia being the five major consolidating credit unions that amalgamate with the smaller credit unions and closed bond credit unions.

Cheers,
Doug

Doug said
The DICO "list of members" website is out of date, too, in that they're still listing as "divisions" of the amalgamated credit union the names of the former credit unions even though those divisions are no longer operating separate websites and have been integrated from a banking system and merged membership perspective. So, it appears longer than it actually is.
Cheers,
Doug  

It would be my guess that the credit unions that have been taken over will likely continue to be on the DICO lists until such time as any term deposits they have issued mature out and only then will they be fully wound up.