Credit union official says to expect more mergers

A top credit union official says that as regulations in the industry continue to tighten there could be several mergers within the sector.

This assessment has come from General Manager of the Barbados Co-operative and Credit Union League Ltd. Anthony Pilgrim, who pointed out that the number of local credit unions has been on the decline.

In fact, speaking Tuesday at a discussion hosted by the Central Bank of Barbados and the Financial Services Commission on the findings of the recently released Financial Stability Report 2018, he said some credit unions were currently exploring amalgamation.

“We have currently about [33] credit unions still operating actively. I can say to you that I am aware that there are at least five credit unions that are actively looking at some form of amalgamation option, as I speak,” said Pilgrim, who opted not to name the institutions or go into further detail.

Saying that a final decision would have to be made by the members of those entities as well as the regulator, he pointed to several factors that would contribute to such a move in that direction.

“As the environment becomes more challenging, the regulatory requirements are more stringent; also the accounting standards. These become more of a challenge for small institutions with limited management capacity. So those are some of the things that tend to drive consolidation in the sector,” he said.

Pilgrim said that over the years there has been “a lot” of consolidation in the credit union sector and he expected that trend to continue.

“Back in the 1990s, we had in excess of 50 credit unions, so really the movement has shrunk by about 40 per cent or so. We expect going forward to see further consolidation in the sector and this is a regional and global trend where . . . practically in every jurisdiction there is consolidation,” he said.

Of the more than 30 credit unions in Barbados, the concentration is among the three relatively larger ones – the Barbados Public Workers Co-operative Credit Union with a membership of more than 95,000 and assets exceeding $1.3 billion; the City of Bridgetown Co-operative Credit Union Ltd with assets of more than $515 million and a membership base of over 64,300; and the BWU Co-operative Credit Union Limited, which has a membership base of over 24,300 and assets over $170.7 million.