Two of British Columbia's largest credit unions, Richmond Savings Credit Union and Pacific Coast Savings Credit Union,have agreed to merge in a bid to cut costs and compete more effectively with the big Canadian banks.
If the merger is allowed to proceed by regulators and credit union members, the combined entity will become Canada's second-largest credit union, with assets of $3.2-billion, 187,000 members and a network of 25 branches in B.C.'s Lower Mainland and Vancouver Island.
Only Vancouver City Savings Credit Union, which has $6.4-billion in assets, 262,000 members and 39 branches, will be larger.
"This is a marriage of two very solid credit unions with a similar culture and a desire to be involved in the community," said Richmond Savings chief executive officer Harri Jansson.
"Working together, we have the potential to become one of the strongest credit unions in Canada and to provide a wide range of services for the future," said Pacific Coast chairman Bill Wellburn.
Pacific Coast's range of financial services includes real estate and life insurance planning.
Mr. Jansson said putting the two entities together will lead to greater efficiencies and lower costs that will better equip the merged company to go head to head with other credit unions and the big banks.
While news of the amalgamation comes eight months after the planned merger of Richmond Savings with Surrey Metro Savings Credit Union fell through, the latest deal is expected to proceed because the boards of both companies have signed a commitment-to-merge agreement.
Its chances of success are also buoyed by the fact that the branch networks of both companies do not overlap, meaning there will be no need to lay off staff.
Pacific Coast's 12 branches are all on Vancouver Island. Richmond's 13 branches are in the Lower Mainland area, which includes Vancouver, its suburbs and the Fraser Valley.
As well, if the merger is approved by B.C.'s Financial Institutions Commission (FICOM), the two companies will continue to operate as separate divisions of a legal entity created to own them. As a result, there is no immediate plan to change the name of either company.
"We both have good brands so what you don't want to do is take away from that," said Mr. Jansson, who will act as CEO of the combined company when the merger is complete.
Pacific Coast CEO Paul Duncan will become president, with responsibility for day-to-day operations.
Having committed themselves to the merger, the two companies will now put together a business plan that will be sent to FICOM for approval. If FICOM approves the deal, members of each company will have a chance to vote on the deal as early as November. In order to complete the merger, each company needs to secure the support of at least two thirds of the members who meet to vote on the deal.