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Email this12:54 pm
December 12, 2009
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It's been awhile since I've updated everyone here on two outstanding federal credit union continuance applications by Saskatoon, SK-based Innovation Credit Union and Langley, BC-based First West Credit Union. Both applications have been been delayed, sometimes repeatedly, with the anticipated federal continuance continuously pushed back into the following year.
However, I am a quite confident, based on Innovation CEO Daniel Johnson's remarks at the April 2022 Innovation Credit Union AGM, in saying that we are now very likely to see Innovation Credit Union continued as a federal credit union in 2022 (perhaps as soon as July or August, but more likely in the fall).
With regard to First West Credit Union's application, it's been approved by the membership, with 84% of those voting (roughly 24,000 members) voting in favour. Its continuance date has not been pushed back significantly, and they are a larger credit union, so I do not expect it likely to be delayed past 2023. I'm less confident than in the Innovation case, but I do feel reasonably confident in saying that First West Credit Union is likely to be continued federally at some point in 2023.
Both continuances are likely to have significant impacts on the provincial credit union systems in British Columbia and Saskatchewan, as they represent significant share of system loans and deposits. In B.C. in particular, First West is B.C.'s second-largest credit union, and its previous second-largest credit union (Coast Capital Savings) was continued federally several years ago. We could well see the B.C. credit union system reduce the deposit insurance guarantee from unlimited to something more in line with the Ontario system ($250,000 per depositor, per deposit category).
Cheers,
Doug
8:22 pm
July 5, 2019
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How has Coast Capital fared since? Have they attracted more non-BC customers? I thought at the time their GIC rates might have to become more attractive, but that didn't happen.
9:00 pm
October 21, 2013
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Coast Capital's home page, at least as displayed in Ontario, reads:
"While we’re not available outside of BC yet, we’re hard at work to bring our innovative solutions and services to Canadians from coast to coast. Get excited to bank with a partner who puts you and your community first."
This has been there for months, if not years.
Don't hold your breath.
11:19 pm
April 6, 2013
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There is also the possibility that Coast Capital is only interested in expanding its lending outside of BC and not its deposit gathering.
Car loans and equipment financial can be originated at car dealers and equipment dealers. No expensive new branches needed.
11:37 pm
October 21, 2013
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They could reach rest of the country online just like so many others do. No need for branches for that.
When/if they outgrow BC deposits, they may come looking for us.
What ever happened to DUCA's bid for federal status? Seemed like a bad and expensive idea to me.
7:40 am
December 12, 2009
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Norman1 said
There is also the possibility that Coast Capital is only interested in expanding its lending outside of BC and not its deposit gathering.Car loans and equipment financial can be originated at car dealers and equipment dealers. No expensive new branches needed.
I think that's a stretch to make, as that's all they've ever offered since going national. I think it's more about extremely poor execution and leadership at Coast Capital. The current CEO seems weak, with no vision.
I suspect Coast Capital wanted to use their national platform to merge with existing provincial credit unions, who wanted a simplified/"back door" way to federal continuance. Unfortunately, with Innovation and First West opting for the more challenging direct federal continuance, they will now have competition to grow deposits and loans by merger (i.e., the "easy route to growth"). I expect Libro Credit Union in Ontario to be courted by at least First West and Coast Capital (and likely already has been courted by Coast Capital).
Cheers,
Doug
5:56 am
April 4, 2018
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Could you explain what is meant by a "federal credit union"?
I already have a savings account with Hubert which did not require me to live in Manitoba. What's the difference?
7:15 am
August 4, 2010
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Hubert is a division of Access Credit Union, in Manitoba, regulated by the Deposit Guarantee Corporation of Manitoba (DGCM), the provincial regulator. Credit unions in most provinces. like Ontario, are restricted to residents of that province. Manitoba apparently allows their credit unions to accept members (at least for the online divisions) from across Canada. But it is still a provincially regulated credit union, with the provincial deposit guarantee, etc.
Federally regulated credit unions are a relative new concept, and there aren't a lot of them. These credit unions have applied and jumped through the hoops to be federally regulated, have CDIC insurance, and can accept all Canadian customers no matter where they are based. There are other benefits for federal regulation that Doug and others have mentioned upthread.
https://www.cumanagement.com/articles/2019/11/canadian-credit-union-expansion
8:05 am
April 6, 2013
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As a provincially regulated credit union, Hubert does not have legal authority to operate outside Manitoba. Provincial regulators in Saskatchewan and Nova Scotia issued cease-and-desist orders in 2010 against Hubert!
Other provinces seem to tolerate Hubert as long as their residents find Hubert on their own and Hubert doesn't advertise to or solicit their residents.
8:06 am
April 4, 2018
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Thank you, this is an interesting development. I would prefer to bank with a credit union for ethical reasons but I also want online no fee accounts that I can keep no matter where I move in Canada. Now it looks like I can get the best of both worlds from Innovation Credit Union.
@Norman1 Back in 2010? How odd, I guess that came to nothing. It would never occur to me to try to join a credit union in another province, if not for the HISA which I learned about through this site!
9:21 am
December 20, 2016
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fionag11 said
.... Now it looks like I can get the best of both worlds from Innovation Credit Union....
Why would one possibly deposit funds in Innovation CU which appears to pay 1.5% on a savings account?
What am I missing?
Stephen
9:34 am
April 4, 2018
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@Nehpets I'm interested in the chequing account which seems to have everything you need for a daily driver account for no fees. Even gives up to $2.50 monthly in bonuses for certain transactions which won't make you rich but is better than the negligible interest of most chequing accounts.
Agree the savings account is nothing to get excited about and I'd stick with Hubert for savings.
10:36 am
August 4, 2010
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Norman1 said
As a provincially regulated credit union, Hubert does not have legal authority to operate outside Manitoba. Provincial regulators in Saskatchewan and Nova Scotia issued cease-and-desist orders in 2010 against Hubert!Other provinces seem to tolerate Hubert as long as their residents find Hubert on their own and Hubert doesn't advertise to or solicit their residents.
I remember that OSFI did an alert with those cease-and-desist, and it even found its way into the FDIC info pipeline. Hubert was using the word "bank" and couple similar transgressions they fixed, but I don't think the provinces have any effective way of preventing them from taking deposits if the Manitoba CU regulator isn't prohibiting them? I suspect the feds could put some unofficial pressure on Manitoba if it really thought it was a problem, which they don't seem to. I know someone in Nova Scotia who has been dealing with Hubert continuously since 2011.
12:19 pm
October 27, 2013
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That may be a 'gray' area one does not wish to test. I'd hate to be a BC resident and have Hubert go broke and Manitoba DGCM decides not to cover losses due to a technicality. For chequing accounts, the sum at risk would not be material. Quite a different story for perhaps 6 figures in GICs or savings accounts.
2:08 pm
April 4, 2018
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Oh dear, that is a disturbing prospect - I am indeed in that situation.
I don't know why no Alberta credit unions have high interest savings accounts, but they don't
2:30 pm
September 28, 2023
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AltaRed said
That may be a 'gray' area one does not wish to test. I'd hate to be a BC resident and have Hubert go broke and Manitoba DGCM decides not to cover losses due to a technicality. For chequing accounts, the sum at risk would not be material. Quite a different story for perhaps 6 figures in GICs or savings accounts.
Their FAQ seems pretty clear on this point:
Are my deposits guaranteed if I reside outside of Manitoba?
Yes. All deposits with Manitoba credit unions and the caisse are covered by DGCM, regardless of where the depositor resides.
2:32 pm
April 4, 2018
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Well, there they have it in black and white
phew 
4:52 pm
December 12, 2009
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everhopeful said
Their FAQ seems pretty clear on this point:
Are my deposits guaranteed if I reside outside of Manitoba?
Yes. All deposits with Manitoba credit unions and the caisse are covered by DGCM, regardless of where the depositor resides.
The issue is whether the deposit guarantee provided by the Deposit Guarantee Corporation of Manitoba is sufficient to cover multiple institution failures and whether or not there's an iron clad, explicit backstop provided by the province of Manitoba. There does not seem to be, based on the text of applicable legislation and regulations. Now, whether or not the government of Manitoba, which needs to be re-elected, would risk large-scale deposit loss by its provincial electors by not stepping in in such a scenario (i.e., they would face political annihilation at the polls), it is more likely the province of Manitoba would step in in such a scenario. For 99% of people, that's probably a sufficient enough guarantee to sleep comfortably at night. For the 1% that need that iron clad signed contract, they can look elsewhere.
Cheers,
Doug
7:57 pm
September 28, 2023
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Doug said
The issue is whether the deposit guarantee provided by the Deposit Guarantee Corporation of Manitoba is sufficient to cover multiple institution failures and whether or not there's an iron clad, explicit backstop provided by the province of Manitoba. There does not seem to be, based on the text of applicable legislation and regulations.
The same FAQ also makes that concern valid:
Does the Government of Manitoba also cover deposits?
No. There is no legislated requirement for the Manitoba government to guarantee deposits.
So as you have stated, it would be a voluntary decision made by the gov't of Manitoba to provide funding if they want to maintain confidence in their credit unions. It is why I do not trust any of the provincial deposit guarantees as much as CDIC, and have invested accordingly. It is probably one of many reasons some credit unions are seeking to become federal, to switch from provincial guarantees to CDIC.
An interesting question: If the Manitoba gov't backstopped the DGCM, could they selectively only bail out Manitoba residents?
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