Voluntary: No credit union will be forced to merge
Incentivised: Financial support will be made available to assist with merger costs
Time Bound: The Minister for Finance, Mr. Michael Noonan TD, recently announced 31st March 2016 as a final date for acceptance by ReBo of any further restructuring proposals.
An amalgamation is when two or more credit unions join together to form a new credit union. The credit unions involved transfer all of the assets and liabilities into the new entity on the effective transfer date and as of that date the credit unions cease to exist and a replaced by the new credit union entity. To date there has been no amalgamations have taken place within the credit union movement, as this is a much more labour intensive and costly process and it also requires applying to the central bank for a new licence.
The initiation phase
This involves credit unions engaging in discussion and forming a provisional agreement on which they can proceed. It also involves preparing a high level business plan to validate the proposed merger is financially sound etc.
The reporting/due diligence phase
This involves due diligence being complete on all of the credit unions involved in the proposed transfer of engagement and preparing reports for each credit on same. It is also necessary to complete an implementation plan to document how the TOE will be implemented. A detailed business plan will also be required in order to gain approval from the central bank.
The Completion Phase
This involves communicating with all the relevant stakeholders (members, board of directors, central bank and general public) within a specified 12 week period. All aspects of the completion are governed by the 1997 Credit Union Act.
A board resolution is where the directors of the credit union make the decision to transfer on behalf of members. This requires a majority and in this instance the board have to communicate to the members of their intention to transfer (during which members have a 21 day period within which they can object to the central bank).
A member resolution involves calling a special meeting of the members during which members will take a vote on the proposed transfer which requires a 75% majority in favour.
Before two or more credit union will decide to formally explore a merger, they will invariably discuss certain key issues of importance to their credit union, these issues typically include:
- Maintaining service levels and local branch office
- Keeping credit union name/chose new name for all the credit unions
- Maintaining staffing levels and no redundancies as a result of merger
- Board formation
- Local knowledge and service to members
- Who will be the transferor / transferee credit union
- Management structure of new merged credit union
You can view a PDF document of all these questions and answers here.
* For more information on ReBo or on restructuring contact a member of the restructuring team on (01) 9022209.