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February 4, 2008
Credit Unions around the world may operate under slightly different laws, but they all have a similar purpose. They are owned and operated by their members and proceeds are returned to their members in rebates, advantageous rates or additional services. Credit unions can be as small as 50 women in El Salvador pooling resources to open market stands or as large as the multi-billion dollar and sophisticated Canadian Desjardins Group, named after one of the original founders of the movement.
Each month, CU Newswire takes a look at activities and issues facing credit unions in different countries. This report will be updated in early March.
AUSTRALIA
Sydney: Lawmakers Pushed to Extend Home Saver Accounts Getting that first home is difficult. That’s why Abacus, the trade association for credit unions and building societies, is encouraging the government to make the Home Saver Accounts attractive for young people. They are encouraging that the superannuation co-contribution scheme be extended to First Home Saver Accounts.
The Abacus proposal is in a budget submission to the Commonwealth Treasury.
They have also come out strongly in support of the new Prime Minister Kevin Rudd’s commitment to foster a culture of savings.
BARBADOS
The Caribbean Confederation of Credit Unions has posted a complete guideline for any country that wants to host their conference. Their 2008 Conference will be held at the Sunset Grande Resort in Jamaica during the summer.
BELIZE
A First in Credit Union History There’s nothing new about credit union partnerships. Leagues from one country will work with leagues from another country. The Belize Credit Union League formed a partnership with the US Southwest Corporate Federal Credit Union in Plano, Texas, but according to the World Council of Credit Unions (WOCCU), this is a first partnership between a corporate credit union and an international association.
The two organizations will establish a relationship based on technical and social exchanges.
Delegates from Texas visited all but one of the Belize credit unions. The technical visits provided the representatives with insight into the issues that Belize credit unions face and areas in which Southwest Corporate will be able to offer assistance.
“This visit clarified the importance of corporate credit unions and confirmed the partnership’s great potential,” said Natalie Goff Belize League Executive Director. “Most of the services that Southwest Corporate offers are applicable in the league. The credit unions in Belize can also transfer a lot of knowledge to US credit unions, especially in community outreach.” A reciprocal visit to the US by the Belize League members is planned for mid-summer.
Some 13 credit unions in Belize service over 41,500 members.
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Dangriga: League Helps Solve Cash Flow Problems of Credit Union When the Citrus Growers and Workers Credit Union in Dangriga faced a cash flow problem, the Belize Credit Union League helped find a solution. The credit union sought a new manager, developed a recovery plan, and offered a withdrawal schedule for members who wanted their money. The League also worked with the Central Bank of Belize. The problem occurred last September.
BRAZIL
Porto Alegre Brazil: 15% Growth Is a Role Model for Others Because WOCCU is helping leaders from global credit union movements challenged by slow membership growth, they looked at the successful growth strategies of the Brazilian credit union movement which has averaged an astonishing growth rate, averaging15% for membership and 30% for assets over the last five years.
The Confederação Interestadual das Cooperativas Ligadas ao, better known as SICREDI is one of the country’s largest credit union systems. SICREDI has successfully established a branded image of financial soundness, service quality and community outreach that has enabled its credit unions to outstrip the banks’ growth in Brazil.
SICREDI has 129 member credit unions serving 1.2 million members through 1,013 points of service in 10 Brazilian states. The system holds US$6 billion in assets and has five state-level corporate credit unions. SICREDI members have access to more than 100 products and services, including savings, credit, utility bill payment services, insurance, currency exchange and credit cards.
Also successful is UNICRED which works with Brazil’s healthcare sector. They have 135 member credit unions serving 153,440 members through 396 points of service in Brazil’s 27 states. UNICRED holds US$2.2 billion in assets and has nine state-level corporate credit unions.
ENGLAND
Shropshire: Quids In Campaign for 300,000 Rural Residents Are Unbanked The Commission for Rural Communities Quids in campaign is aiming to raise awareness of the financial services needs of rural people. It’s report Promoting Financial Inclusion in Rural Areas published last week states that 300,000 people in rural areas do not have access to a bank account, and that 22% of households in rural areas live in poverty.
The report features a series of good practice case studies’ including one about the Just Credit Union based in Shropshire. The report states that “rather than being projected as a banker for the poor, Just aims to provide high quality financial services to it’s county-wide clients” and that “embracing technology in a large rural area, Just works in partnership to promote financial inclusion through volunteers in community centres, churches and housing associations.”
For more information on the campaign and to access the full report, go to: www.ruralcommunities.gov.uk
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Manchester UK: Project Delta Will Use PEARLS to Fight Doorstop Lending Project Delta will support some 80 credit unions that in turn are helping the unbanked, as the financially excluded in the United Kingdom are called.
These people are often victims of doorstop lenders, who charge exorbitant rates for short term and small amount loans.
The Association of British Credit Union, Ltd’s (ABCUL) CEO Mark Lyonette expressed pleasure that the project has begun. Many credit unions are new to capacity-based lending and have little experience in targeting doorstep lending users and helping them find credit at reasonable rates.
WOCCU’s PEARLS system will be used in the project. Lyonette said, “Our experience of introducing PEARLS into Britain suggests that many of these credit unions are capable of reform but may need help in identifying and implementing change.” PEARLS is a Monitoring System from WOCCU and is the only software of its kind to combine a powerful relational database with an internationally proven methodology for improving operational efficiency.
PEARLS provides credit union managers with concise, easy-to-read reports that reveal institutional weaknesses and trends. It also offers a strategic business planning tool to help managers implement change.
The Delta project provides PEARLS as a tool to all growth fund credit unions to help direct and support their financial analysis.
Project Delta gives credit unions: * Cash injections for vital training development within the movement * An improved ability to measure success across peer groups of credit unions * An embedded fresh approach to capacity-based lending within credit unions * A further recognition by government that credit unions have come of age and are a vital part of financial choice on UK high streets * Specific support for the Growth Fund credit unions in terms of mentoring, measurement and training * Further opportunities to continue scaling up the credit union movement to meet demand of more members
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Rotherham: £50 Million Escapes into Unscrupulous Lenders Located in South Yorkshire with a population of 253,000+ people, the borough of Rotherham estimates that some £50 million is taken from the region in loans by doorstop lenders, pawnbrokers and cheque cashers according to a new Financial Inclusion Project.
The Rotherham Credit Union Development Agency has played a leading role in drawing together a financial inclusion strategy for Rotherham Borough aimed at tackling this and other issues. They are seeking funding and support for the implementation of the strategy. The four credit unions in the borough will play a part in this development.
IRELAND
Dublin: League Loses Liam Liam O’Dwyer, who took over the troubled Irish Credit Union League five years ago as CEO, has stepped down. He brought many positive changes, including a certified training program and greater communication between the regional chapters and the League. He also participated in talks with government and European officials to make sure that credit unions received the attention they deserved as new regulations were developed.
O’Dwyer cited family reasons, and told CU Newswire that it was the many weekends and extra time away from his family that was the root of his decision. He will be working as CEO of a charity to help the deaf.
Almost every Irish town and village has a credit union, but many are failing to attract younger people. Formed when Ireland was poverty-stricken in the 1960s by Nora Herhily and Nobel Peace Laureate John Hume, credit unions are now dealing with a far more wealthy membership. Ireland has been called the Celtic Dragon for its huge financial growth over the last decade.
The head of legal services in the League, John O’Halloran, will be acting CEO.
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Dublin: Credit Unions May Get Millions of Euros According to a report in the Irish Independent, Irish credit unions may be in line for a multi-million Euro payout because of disputed investment products. The financial services ombudsman has confirmed a finding against Davy Stockbrokers.
Davy was told to buy back the bonds sold to Enfield Credit Union after it complained about the sales methods for open-ended perpetual bonds.
According to the article, €270m of the bonds had been sold to148 credit unions. Losses were estimated at $25 million since sales began in 2002.
Davy has 21 days to appeal the decision to the High Court.
To date only Enfield has pursued a complaint.
Financial Services Regulatory Authority Credit Union Regulator Brendan Logue has stated he wants the losses fully reflected in credit union financial statements.
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Blog Gives Irish Credit Unions Another Voice Representing neither the Irish League of Credit Unions nor the Credit Union Development Association a blog, www.irishcuvoice.com, is trying to tell it like it is. The movement has had many mishaps over the past few years and factions of all types have broken out. With blogging, it is impossible for any organization to control the information flow. Most posting are articles from different newspapers plus some commentary.
SCOTLAND
Edinburg Scotland: CU Leader Praises Plan To Teach Children Money Management Money management is a part of the Scottish Government’s Curriculum for Excellence Program which will target Scottish schoolchildren and teach them money management skills. It is part of the Scottish Government’s new approach to learning, the Curriculum for Excellence.
Maureen Watt, Minister for Schools and Skills, said: "A key aim of Curriculum for Excellence is to produce responsible citizens of the future. Numeracy is a key life skill and our children need to be confident and competent in using numbers in practical situations. This new kind of ’home economics’ will pay dividends on a larger scale when these pupils enter the world of work and apply their financial skills to business."
The move has been praised by the financial services sector in Scotland, including Chief Executive of Glasgow-based Scotwest Credit Union, Rod Ashley, who believes that “there is a need for people to be taught how to avoid falling into debt – starting in the classroom.”
UNITED STATES
Manchester NH: Oldest CU Earns 100 Candles The oldest credit union in the United States celebrated its 100th birthday. St. Mary’s Bank, in this New England Mill town on the banks of the Merrimack River, has 58,000 members and assets of US$625 million.
It was founded in 1908 to help the mill workers by Monsignor Pierre Hevey who travelled to Quebec to meet with Alphonse Desjardins founder of the Canadian movement to see how credit unions could help the Manchester French-Canadian immigrant population.
The credit union continues to live up to the movement’s traditions. This year the credit union and the city of Manchester launched one of the largest neighbourhood renovations projects in the history of the city.
WALES
Cardiff: Parents and Kids to Join in Savings Club Cardiff Credit Union will run a savings collection service for parents and pupils at the Meadowlane primary school. Every Friday volunteer parents will pick up that week’s deposits. Children who join will receive a goody bag offered by the Haford Housing Association.
The school was visited by Deputy Minister for Regeneration, Leighton Andrews who said, “This savings club is an excellent example of what can be achieved by the local people working together. The scheme will offer much needed financial advice and services to local communities.”
In Wales, as in England and Scotland, credit unions are crucial in the battle against financial exclusion.
“The One Wales agreement commits us to providing credit union access for every secondary school pupil in Wales by 2011 and to encouraging credit unions to take deposits of Child Trust Fund accounts,” Andrews said. Under the scheme the government provides a £250 voucher to be deposited in the name of the child. The accounts can earn up to 8%. There is a system to appoint someone to look after the account if the parents are unable to do so.
“Credit unions are an important part of the community in educating people to save and borrow wisely for the future. If we can inform parents and children about savings we can help them avoid unnecessary debt,” Glenda Porter, Manager of Cardiff Credit Union said.