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Email this8:25 am
December 12, 2009
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Breaking News: It looks like DUCA Financial Services Credit Union is going to be the first Ontario credit union to continue itself federally. Nothing's been filed yet, but the credit union has discussed it at the executive and board levels, and, from their Investment Share Offering Nehpets (Stephen) posted earlier, it looks like they could be filing the required documents in "the near future." I would say 2020 could see a swath of federal continuance applications, with Innovation Credit Union finalized, First West Credit Union and DUCA filing, and Libro Credit Union (of Ontario) possibly filing as well or merging with Coast Capital Savings Federal Credit Union. At the same time, don't discount Conexus Credit Union, fresh off closing 25% of their branch network in rural Saskatchewan, from continuing federally.
Details here: https://growmore.duca.com/export/20190809_Offering_Statement_Aug_%209_AK.pdf
Cheers,
Doug
5:13 pm
October 21, 2013
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If this means losing our 250K deposit insurance to 100K at CDIC, then I would consider this bad news.
What is the advantage of it? Coast doesn't seem to have done anything much with it. Doesn't DUCA already deal with people from out of province? - I think I recall someone from QC saying they belonged to it.
5:09 am
December 12, 2015
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That could be me. I signed up a few years ago when they had good rates on very long GICs. They were pleasant and easy to deal with. I thought they had stopped accepting members from outside Ontario after I had signed up. Agree with Loonie, CDIC limits are a problem and if they decline I will move money OUT from DUCA when the GICs mature. Bigger is not better.
8:19 am
December 12, 2009
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Loonie said
If this means losing our 250K deposit insurance to 100K at CDIC, then I would consider this bad news.
What is the advantage of it? Coast doesn't seem to have done anything much with it. Doesn't DUCA already deal with people from out of province? - I think I recall someone from QC saying they belonged to it.
Yes, but not immediately. CDIC provides transitional coverage for 6 months (from continuance date, which, for Coast, was November 1, 2018) on demand deposits and for the remainder of the term on term deposits. As well, foreign currency deposits will be insured under CDIC (though within one's existing sole, CAD denominated limits) beginning April 30 or May 1 next year.
I wouldn't expect DUCA to make their final filing and merger vote before next fall, with federal continuance occurring in 2021 or 2022, more likely, at the earliest.
DUCA did used to accept out of province members, but reportedly got legal advice saying they shouldn't (I suspect this is because of them not having the high priced Bay Street lawyers that would've given Meridian conflicting advice that said the opposite). As well, while they could accept deposits from out of province clients, like Meridian, there is uncertainty as to whether they can lend or at least the degree to which they can lend.
Advantages I think are unimpeded lending ability and less regulatory restrictions on their business operations. As well, CDIC and OSFI, surprisingly, seem to be more preferable regulators with which to deal (even if they now come under banking consumer protection regulations and can no longer refuse to open an account due to "low credit score" or other arbitrary reasons).
A disadvantage, though, to federal continuance, aside from the notionally higher deposit insurance limits would be they have to divest their insurance operations (not sure if DUCA has any insurance businesses). First West Credit Union just sold their entire insurance services business to Westland Insurance Group, Ltd., effective September 30, 2019, and First West Insurances Services Ltd. was legally amalgamated with Westland Insurance Group Ltd. effective October 1, 2019. And, we know how Wawanesa-owned Western Financial Group handled its Coast Capital Insurance Services Ltd. subsidiary that was putting Coast off-side Bank Act regulations and with OSFI: they've renamed it Western Coast Insurance Services Ltd., so will be separate from Western Financial Group still but it will at least adopt as its logo the Western Financial Group logo. @Rick, can you confirm if the former Coast insurance locations are now in separately walled off premises from the credit union branches, with no adjoining passageway?
Cheers,
Doug
9:38 am
December 20, 2016
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Loonie said
If this means losing our 250K deposit insurance to 100K at CDIC, then I would consider this bad news.
Exactly what crossed my mind as well. DUCA rates among the top for periodic promos rates and customer service among the CU's and FI's with which I've had experience.
I also wonder about those three year 3.25% GIC's many of us purchased last year when considering DICO vs CDIC limits.
Maybe they would set up a Federal subsidiary and maintain a Provincial division along the lines of Meridian and Motus.
Stephen
11:37 am
December 12, 2009
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Nehpets said
Exactly what crossed my mind as well. DUCA rates among the top for periodic promos rates and customer service among the CU's and FI's with which I've had experience.
I also wonder about those three year 3.25% GIC's many of us purchased last year when considering DICO vs CDIC limits.
Maybe they would set up a Federal subsidiary and maintain a Provincial division along the lines of Meridian and Motus.
Stephen
If you purchased a 3-year GIC at 3.25% on December 31, 2018, for, say, $250,000 for simplicity purposes, and DUCA submits a final application to CDIC and OSFI and FSRAO by the spring 2020, for the sake of analysis, and the members approve the continuance at a fall 2020 member vote, and the federal continuance date occurs April 1, 2021, then CDIC would insure that $250,000 GIC under transitional coverage provisions until its maturity on December 31, 2021 (later that year). At that point, it would only be insured to $100,000 with your same depositor insurance limits.
Essentially, CDIC insures demand deposits under previous deposit insurance regime limits for 6 months from continuance date and term deposits under the previous deposit insurance regime limits until the term deposit(s)'s maturity date.
More details:
https://www.cdic.ca/your-coverage/list-of-member-institutions/federal-credit-unions-fcus/
Hope that makes sense,
Doug
2:01 pm
December 20, 2016
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Doug said
If you purchased a 3-year GIC at 3.25% on December 31, 2018,........, then CDIC would insure that $250,000 GIC under transitional coverage provisions until its maturity on December 31, 2021
Thanks for that helpful information, Doug!
Stephen
2:29 pm
October 21, 2013
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DUCA may have already edged in this direction. Its most recent 3% savings offer was limited to 100K deposit.
As to the lending argument, perhaps we need to see their books. I believe MB CUs are limited to lending within MB, yet they have unlimited insurance. and will accept out of province members (with issues remaining around QC). Surely there are enough borrowers in Ontario to keep DUCA afloat!
One overdue solution would be for CDIC to increase its deposit limits.
If this goes forward, it may direct more business to the smaller ON CUs. And, although I have issues with Meridian, I will thank them for not choosing this route. I just hope they can get motus moving. Motus can lend all over the country yet appears to be failing to do so so far. It's hard to see why DUCA would do any better.
2:33 pm
October 27, 2013
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Question for those more knowledeable: How often has insurance been required to intervene and bail out CU depositors in the last 40 years? And how seamless has it been?
There was a flood of mostly trust failures in the 80s and 90s and CDIC handled them seamlessly. Depositors hardly knew anything had occurred other than a new letterhead from the successor organization.
2:48 pm
October 21, 2013
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It wasn't as seamless as all that.
The ones where CDIC was able to make arrangements for them to be taken over may have seemed seamless. But the ones that failed outright were not.
My dad had to wait many months to get his money back from CDIC, and was wondering if he ever would. No interest was paid in the interim and he lost the rate he'd been getting on the GIC.
As to the question, I don't know if any CUs have failed. I know of at least one that closed but not sure if it failed.
3:29 pm
December 12, 2009
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Good point, AltaRed. CDIC claims no one has ever lost a dollar of insured, or perhaps uninsured as well, deposits since its late 1960s creation. As Loonie points out, it may well have taken months in the past, but one of CDIC's near-term goals, actually, is to provide next-day payment of all insured deposits in the event of a failure. They aim to have that in place within the next 3-5 years, if not sooner.
That's one advantage CDIC holds over the provincial deposit insurance regimes: speedier payment and resolution.
Cheers,
Doug
5:03 pm
October 27, 2013
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I went through the failure of Principal Trust in the '80s. One month the statement had Principal Trust. The next month was a new letterhead. GIC terms and interest were honoured.
I suppose it may be situational in terms of how the transition is. At one time, there were almost monthly failures (or so it seemed).
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