Meridian Credit Union Ltd. raised $125-million in debt from the Caisse de dépôt et placement du Québec, as the credit union seeks to keep capital in line with aggressive plans for expansion.
With 92 retail banking branches and 14 business banking centres across Ontario, Meridian is the largest credit union in the province and the third largest in Canada. The company’s asset base increased by $3-billion or 17 per cent last year, according to chief financial officer Tara Daniel.
“Capital is the critical part of us being able to remain a strong and sound financial institution, and as we continue to grow we need to ensure that we are capitalizing that growth and keeping those capital levels healthy,” Ms. Daniel said.
The raise, which involves subordinated private debt, was done on the advice of Canadian Imperial Bank of Commerce, which introduced Meridian to the Caisse, Ms. Daniel said.
“We weren’t actually active in the market looking for an opportunity, although obviously capital is on our mind as we look at our growth trajectory expected over the next five years,” Ms. Daniel said.
"CIBC is a long-standing partner of Meridian. Knowing our strategy and through their partnership with Caisse, and what they were looking for within their investment portfolio, they saw a great opportunity between the two organizations, so they connected us,” she added.
Ms. Daniel did not offer any additional details about the terms of the debt.
Credit unions have been growing in popularity in recent years as people look for smaller, local alternatives to the large banks, both for retail banking and for small-business lending.
Meridian added 10,000 new members last year and expects to continue double-digit membership growth next year, Ms. Daniel said. The credit union is focused primarily on the Greater Toronto Area, although it has branches in smaller towns and cities across the province.
“Meridian has experienced stable growth in terms of both assets and membership over several years, and as such fits naturally with our investment strategy,” said Marc Cormier, head of fixed income for the Caisse, in a statement.
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Mark Rendell