Hanover and Montego Bay Credit Unions mulling merger

WESTERN BUREAU:

August 1, 2016 has been set as the date for the concretisation of the proposed merger between the Hanover and the Montego Cooperative credit unions, which stakeholders see as being critical to the continued existence of both entities.

According to general manager of the Montego Cooperative Credit Union, Ornell Bedasse, the merger comes against the background of the stringent regulations and criteria for licensing that has been instituted by the Bank of Jamaica (BOJ), which is taking over from the Registrar of Cooperative Societies as the supervisor for the island's credit unions.

"It is about 100 things that are to be done to even get a licence to operate...," said Bedasse, while addressing a joint meeting of the two credit unions in Hopewell, Hanover, on Tuesday. "Once the BOJ regulations are passed to regulate the credit unions, each credit union will have to apply for a licence to continue to operate. Some are so small that they will not be able to meet all the requirements. About 20 years ago, we had a hundred and something credit unions; it came down to 80. A couple of years ago it was 50, now we are down to 34, and I expect more mergers to take place in preparation for what is happening.

"The aim of the movement is to reduce the number of credit unions from 34 to about six or 10. So whether we like it or not, it is going to happen because we are being forced to consolidate and to merge because of the regulations that are coming," continued Bedasse. "...Although there has been resistance in some quarters, the smaller credit unions are going to be forced to merge with the larger ones."

Combined, both credit unions have savings of $4.175 billion; $2.861 billion in loans and $5.2 billion in total assets. As a

single entity, it would be the fourth-largest credit union on the island.

FRIGHTENING STIPULATIONS

Leroy Dawes, the immediate past president of the Hanover Cooperative Credit Union, has described as "frightening" some of the stipulations being imposed by the BOJ. They include the making of quarterly instead of annual returns and the 100 per cent protection for loans which are delinquent for more than 90 days.

"Based on what the BOJ is saying, they are not willing to regulate 34 credit unions, and once the credit unions cannot meet the deadline, they are going to dictate to them who should merge with who ... any credit union who cannot meet the deadline, the BOJ will either just order them closed or merged," said Dawes.